USD 1.63 trillion in revenue growth through 2028; 10-day inventory shortage — UBS: The chip boom remains intact; memory shortages persist through 2027; DRAM prices surge another 22% in Q3

When a hardware manufacturing company achieves an operating profit margin of 76%, it is no longer a conventional 'cyclical stock.' V. USD 400 billion vs. USD 2.7 billion: The 'arms race' in capital expenditures Faced with such a tight supply-demand balance, memory giants are ramping up production at an unprecedented pace. Yet a critical reality remains: even the most aggressive expansion plans cannot alter the shortage landscape before 2027. Micron raised its capital expenditures for fiscal year 2026 to approximately USD 2.7 billion—a 70.3% year-on-year increase. The company expects quarterly capital expenditures throughout fiscal year 2027 to exceed those of Q4 FY2026, continuing to intensify investment in memory capacity and technological advancement. SK Hynix’s capital expenditure plan is even more staggering. The company has increased its 2026 capital expenditure target to over KRW 40 trillion (approximately USD 2.86 billion), significantly higher than KRW 30.2 trillion in 2025, further expanding AI-optimized memory capacity—including HBM. Simultaneously, SK Hynix announced a share buyback and cancellation program worth up to KRW 40 trillion—deploying two separate KRW 40-trillion-level funds: one for capacity expansion, the other for share repurchase. SK Hynix’s confidence stems from its financial strength. As of the end of Q2 2026, the company held net cash of approximately KRW 69 trillion. The planned buyback amount represents nearly 60% of that figure. For a semiconductor company that must continuously build expensive wafer fabs and procure EUV lithography machines, sustaining such massive concurrent funding demands is itself the most direct testament to the AI boom. Yet the issue lies in lead times: it takes two to three years for wafer fab investments to translate into actual production capacity. Micron’s USD 2.7 billion and SK Hynix’s KRW 40 trillion investments will not yield meaningful new supply until 2028–2029 at the earliest. Until then, the memory shortage is virtually unavoidable. VI. Outlook: Where lie the risks after USD 1.63 trillion? USD 1.63 trillion in revenue; 118% growth; cycle bottom in 2028; shortage endpoint in 2027; 10-day inventory emergency—this cascade of figures collectively paints the most authentic picture of today’s semiconductor industry. UBS’s assessment is clear and resolute: 'Although semiconductor revenue growth may peak mid-2026, leading indicators—including foundry utilization rates, packaging equipment demand, and memory chip profitability—all support the continuation of this cycle through at least 2028.' UBS maintains strong preference for Micron Technology and NVIDIA, and among international semiconductor stocks, its top picks are ASE Group, Hon Hai Precision Industry, NXP Semiconductors, Infineon Technologies, MediaTek, Quanta Computer, Samsung Electronics, SK Hynix, and TSMC. Yet risks remain substantial. JPMorgan’s research report cautions that whether subsequent growth expectations materialize hinges on whether memory shipments rebound as scheduled starting in August—and whether price momentum can be sustained. If shipment volumes remain persistently weak, or if slowing demand from AI compute endpoints dampens procurement rhythms, the optimistic scenario of simultaneous volume and price growth will collapse, triggering a prolonged industry correction. Moreover, memory prices have historically exhibited extreme volatility. In 2018, DRAM prices surged over 100%, only to plummet by more than 50% in 2019.

Top five global institutional investors disclose Q2 holdings! Aggressively targeting three key sectors

UBS’s total Q2 holding value reached USD 4.3075 billion. Battery-related stocks received large-scale增持 (increased positions) (holdings exceeding USD 1.07 billion), while UBS made sizable new entries into non-ferrous metals, power grid equipment, and semiconductor equipment sectors. Significant new positions were also established in communications equipment and chemical new materials; composite materials likewise saw increased allocations. Most of these were newly established positions, reflecting highly decisive portfolio adjustments. III. Abu Dhabi Investment Authority (ADIA): USD 2.34 billion — Middle Eastern sovereign wealth fund broadly acquires Chinese assets ADIA’s total Q2 holding value stood at USD 2.3429 billion. Its增持 (increases) focused on mining leaders (nearly USD 390 million), consumer electronics (nearly USD 330 million), chemical new materials (over USD 170 million), and hydraulic equipment (USD 110 million). It also initiated new positions in photovoltaic (PV) equipment (over USD 150 million), minor metals (over USD 90 million), and defense electronics (over USD 70 million). Only optical & optoelectronic stocks saw a modest reduction. The Middle Eastern sovereign wealth fund continues to expand its footprint, signaling markedly heightened attention toward China’s core assets. IV. Morgan Stanley: Nearly USD 1.99 billion — Heavy weighting on power grid equipment Morgan Stanley’s total Q2 holding value was USD 1.9879 billion, with a distinct investment style. Its core holdings center on power grid equipment leaders (holdings exceeding USD 160 million), while it added positions in communications equipment and ceramic materials. New entries were also made in automotive components, PV equipment, and software development; only PV modules saw a slight reduction. This round of moves clearly follows high-certainty industrial trends. V. JPMorgan Chase: USD 650 million — Comprehensive deployment, betting on new materials and communications JPMorgan’s total Q2 holding value amounted to USD 650.7 million, with notably active new entries. Its top holdings concentrated in electronic components (nearly USD 80 million), communications equipment (nearly USD 70 million), and optical & optoelectronics (nearly USD 70 million); it also allocated positions in specialty gases (over USD 40 million), rare metals (over USD 40 million), and automation equipment (nearly USD 40 million). Many of these holdings appeared for the first time among the top ten circulating shareholders, underscoring highly resolute portfolio adjustments. VI. Summary The Q2 portfolio adjustments by the five major QFIIs showed remarkable consistency: reducing exposure to traditional sectors while increasing allocations to power grid equipment, semiconductors, and resource commodities.

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