@thewallstreetskinny — 28x breakout

@thewallstreetskinny — 28x breakout | Overshot

Product placement

NVIDIA: ACTS - it is a company that designs and sells AI chips. Removing it would change what happens in the video. It is the central subject of the video. SEMI ETF (SMH): APPEARS - it is an ETF that tracks semiconductor companies. Removing it would not change what happens in the video. KLA Corp: APPEARS - it is a company listed in the SEMI ETF. Removing it would not change what happens in the video. Intel: APPEARS - it is a company listed in the SEMI ETF. Removing it would not change what happens in the video. Marvell Tech: APPEARS - it is a company listed in the SEMI ETF. Removing it would not change what happens in the video. Qualcomm: APPEARS - it is a company listed in the SEMI ETF. Removing it would not change what happens in the video. ASML: ACTS - it is a company that makes lithography machines for chip manufacturing. Removing it would change what happens in the video. Cadence: ACTS - it is a company that sells EDA software for chip design. Removing it would change what happens in the video. Synopsys: ACTS - it is a company that sells EDA software for chip design. Removing it would change what happens in the video. Micron: ACTS - it is a company that makes memory chips. Removing it would change what happens in the video. Applied Materials: ACTS - it is a company that makes deposition machines for chip manufacturing. Removing it would change what happens in the video. Lam Research: ACTS - it is a company that makes deposition machines for chip manufacturing. Removing it would change what happens in the video. Texas Instruments: APPEARS - it is a company listed in the SEMI ETF. Removing it would not change what happens in the video. Analog Devices: APPEARS - it is a company listed in the SEMI ETF. Removing it would not change what happens in the video. SK Hynix: ACTS - it is a company that makes memory chips. Removing it would change what happens in the video. Sandisk: ACTS - it is a company that makes memory chips. Removing it would change what happens in the video. AMD: ACTS - it is a company that makes logic chips. Removing it would change what happens in the video. Coreweave: ACTS - it is a company that provides cloud computing services for AI. Removing it would change what happens in the video. OpenAI: ACTS - it is a company that develops AI models. Removing it would change what happens in the video. Foxconn: ACTS - it is a manufacturer that assembles electronics. Removing it would change what happens in the video. Wistron: ACTS - it is a manufacturer that assembles electronics. Removing it would change what happens in the video. TSMC: ACTS - it is a semiconductor foundry that manufactures chips. Removing it would change what happens in the video. Shin-Etsu: ACTS - it is a company that supplies silicon wafers. Removing it would change what happens in the video. Sumco: ACTS - it is a company that supplies silicon wafers. Removing it would change what happens in the video. JSR: ACTS - it is a company that supplies photo resist chemicals. Removing it would change what happens in the video. Tokyo Electron: ACTS - it is a company that makes photo resist machines. Removing it would change what happens in the video. Ainamoto: ACTS - it is a company that makes ABF substrate film. Removing it would change what happens in the video. Aventest: ACTS - it is a company that makes testing machines for chips. Removing it would change what happens in the video. Teradyne: ACTS - it is a company that makes testing machines for chips. Removing it would change what happens in the video.

On-screen text

Newsroom Press Release SHARE NVIDIA Announces Financial Results for Second Quarter Fiscal 2027 Revenue of $96.2 billion, up 106% from a year ago Data Center revenue $48.6 billion, up 117% from a year ago August 26, 2026 NVIDIA IS NOW EARNING OVER $1 BILLION A DAY THE CRAZIEST PART IS THEY DON'T MAKE CHIPS APPLE MAKES THE IPHONE IF YOU WANT TO KNOW WHO EXACTLY IS MAKING THESE AI CHIPS HERE IT IS IN UNDER THREE MINUTES FIVE LAYER CAKE THE SEMICONDUCTOR TRADE SEMI ETF (SMH) 5. APPS 22% 11. KLA Corp 4.2% 4. MODELS 9.4% 12. Intel 4.2% 3. INFRA 6.5% 13. Marvell Tech 3.8% 2. CHIPS 5.2% 14. Qualcomm 3.7% 1. ENERGY 5. ASML 5.1% 15. Cadence 2.8% 6. Micron 5% 16. Synopsys 1.9% 7. Applied Materials 4.9% 17. Monolithic Pur 1.4% 8. Lam Research 4.5% 18. Teradyne 1.4% 9. Texas Instruments 4.4% 19. NXP Semi 1% 10. Analog Devices 4.3% 20. STM microelectronics 1% COREWEAVE/OPEN AI CHIPS COMPUTE NVIDIA "Fabless" $100bn 1. DESIGN "RACK" COMPUTER TRANSI NETWOR COOLING Foxconn, Wistron Cadence Synopsys TSMC "The Fab" SILICON WAFER Shin-Etsu Sumco JAPAN ~50% SUPPLY DEPOSITION APPLIED MATERIALS LAM RESEARCH PHOTO RESIST JSR Shin-Etsu LITHOGRAPHY ASML $400mm DICING DISCO CORP AJINOMOTO SUBSTRATE TESTING KLA Teradyne AI LOGIC CHIP MAKERS SMH includes ~25 of the largest U.S.-listed companies involved in semiconductor production, design, and equipment. THE FOUR COMPANIES LISTED ARE NVIDIA AMD AND BROADCOM BUT BACKING UP A SECOND INFRASTRUCTURE PLAYER THE PHOTO RESIST MACHINE TOKYO ELECTRON AND THE PHOTO RESIST ITSELF FROM SHIN-ETSU WHO YOU'VE SEEN BEFORE AND JSR BY JAPANESE STATE BACKED FUND IN 2024 WITH THE PHOTO RESIST GOES INTO A MACHINE WHERE LIGHT BOUNCES OFF A SERIES OF MIRRORS PATTERN INTO THE COATING THE LIGHT MARKS UP RESIST SURVIVE AND THEREFORE WHERE THE CIRCUIT ENDS UP THIS IS CALLED LITHOGRAPHY ONLY ONE COMPANY MAKES THE MACHINE FOR LEADING ASML BASED IN THE NETHERLANDS CHINA HOWEVER JUST BUILT THIS FIRST MACHINE ONE TIER DOWN NOW THE WHOLE PROCESS REPEATS THROUGH THE SAME SETS OF MACHINES AROUND 80 THE DEPOSITED FILM ACCUMULATES INTO PATTERN LAYERS BUILDING TRANSISTORS AT THE BOTTOM AND THE WIRING ONCE EVERY LAYER IS DONE THE WAFER GETS CUT INTO INDIVIDUAL CHIPS ON A MACHINE MADE BY A JAPANESE COMPANY WHICH IS WHERE WE GET OUR GPU AND THEN GETS MOUNTED SIDE BY SIDE THE MEMORY SPECIFICALLY HBM WHICH WE COVERED IN A PRIOR BUT AS A REMINDER MICRON AND SK HYNIX ARE TWO OF THE MAJOR PLAYERS IN HBM THE WHOLE THING THEN SITS ON AN ABF A FILM MADE BY AJINOMOTO A JAPANESE COMPANY BEST KNOWN FOR INVENTING MSG TESTING THOUGH REALLY IT'S BEEN HAPPENING ALL ALONG KLA MAKES THE INSPECTION LAYER AS IT'S BUILT AND THE FINAL ELECTRIC TEST COMES DOWN TO AVENTEST AND TERADYNE THE REALITY DOESN'T SELL CHIPS THEY SELL RACKS TSMC SHIPS THE FINISHED MANUFACTURER LIKE FOXCONN OR WISTRON THEY MOUNT THE CHIPS ONTO NVIDIA'S BOARD A COMPUTE TRAY SWITCH TRAY LIQUID COOLING AND WHOLE THING BECOMES A RACK THAT RUNS $6 MILLION THAT'S WHAT SHIPS TO THE CUSTOMER

Transcript

NVIDIA Q2 earnings 👀 NVIDIA is now earning over $1 billion a day. But the craziest part is they don't make chips. Apple makes the iPhone. If you want to know who exactly is making these AI chips, here it is in under three minutes. There's three things we need to set the stage. The first is where we are within the AI ecosystem. We're in layer two, the chips. Second is when people talk about chips, they distinguish between memory and logic chips. The poster child for logic chips is NVIDIA. But NVIDIA is only one chip maker. And the reality is they don't make chips anymore than Apple makes the iPhone. They outsource the manufacturing. So to orient ourselves with the chip manufacturing process, we're going to use the SEMI ETF SMH. SMH includes ~25 of the largest U.S.-listed companies involved in semiconductor production, design, and equipment. The four companies listed are NVIDIA, AMD, and Broadcom, but backing up a second, infrastructure players. What actually happens when an infrastructure player building a data center places a chip order with NVIDIA, AMD, or Broadcom? The first thing is the chipmaker will have to use some kind of special software called EDA software to create a chip design. The two major companies that sell the software are Cadence and Synopsys. For my fellow engineers, think of the software like CAD. NVIDIA or whoever creates the design and that is sent to the fabrication facility or fab, TSMC, which stands for Taiwan Semiconductor Manufacturing Company. It produces 90% of the cutting edge logic chips. This is why Taiwan has become so important to you politically. So what actually happens inside these fabs, and more importantly, which companies are involved? It starts with polished silicon wafers. Two suppliers, Shin-Etsu and Sumco, make up about half the world's supply. Both are in Tokyo, which is why you won't find them in SMH. The next step is really two in one. First is deposition where a thin film gets laid down on the wafer. That film is the actual material the circuit is built from. Then a second coating goes on top, a light sensitive chemical called photo resist, which acts as a stencil for what comes next. The deposition machines are from Applied Materials and Lam Research. The photo resist machine comes from Tokyo Electron. And the photo resist itself from Shin-Etsu, who you've seen before, and JSR, a Japanese company taken private by Japanese state-backed fund in 2024. With the photo resist on, the wafer goes into a machine where light bounces off a series of mirrors and prints the circuit pattern into the coating. The light marks up resist survive and therefore where the circuit ends up. This is called lithography. Only one company makes the machine for leading edge chips: ASML, based in the Netherlands. China however just built its first machine, one tier down now. The whole process repeats as the wafer goes through the same sets of machines around 80 times. The deposited film accumulates into patterned layers, building transistors at the bottom and the wiring at the top. Once every layer is done, the wafer gets cut into individual chips on a machine made by a Japanese company, which is where we get our GPU. And then gets mounted side by side with the memory, specifically HBM, which we covered in a prior video. But as a reminder, Micron and SK Hynix are two of the major players in HBM. The whole thing then sits on an ABF substrate, a film made by Ajinomoto, a Japanese company best known for inventing MSG. The last step is testing, though really it's been happening all along. KLA makes the inspection tools that check every layer as it's built. And the final electrical test comes down to two companies: Atest and Teradyne. The reality is NVIDIA doesn't sell chips, they sell racks. TSMC ships the finished product to a manufacturer like Foxconn or Wistron. They mount the chips onto NVIDIA's board, add switch trays, liquid cooling, and the whole thing becomes a rack that runs $6 million. That's what ships to the customer.