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Picks and shovels of chip manufacturing - the machines that make the machines.
| Indicator | State | Current reading | Lead (mo) |
|---|---|---|---|
WFE capex YoY (combined) Combined wafer-fab-equipment spending YoY across TSMC + Samsung + Intel + memory makers (MU / SK Hynix). The single most important demand signal for equipment OEMs. Lags memory pricing by ~2 quarters. | bullish | TSMC only: NT$443.2B of capex in Q3 2026, up 54% from NT$287.5B a year earlier. Samsung, Intel and the memory makers not re-observed. observed 2026-10-15 | 6 |
EUV system shipments (ASML quarterly) ASML EUV unit shipments per quarter (NXE:3800 + High-NA EXE:5200). Direct measure of leading-edge node ramp; the cleanest single-vendor cycle indicator in equipment. | bullish | Partial: ASML sold 113 new lithography systems in Q3 2026, up from 86 in Q2; the release does not split EUV from DUV units. observed 2026-10-14 | 4.5 |
Equipment book-to-bill ratio Industry-wide book-to-bill (orders / billings) across the major equipment OEMs. >1.0 = orders running ahead of shipments = forward demand. Reverts < 1.0 at cycle turns. |
| bullish |
| ~1.05 industry-wide (most OEMs > 1.0) observed 2026-05-28 |
| 3 |
Memory fab utilization % Cross-bubble signal: same underlying datum as the memory bubble's indicator #5. When memory fabs run >90%, they order replacement and expansion equipment. When utilization drops, equipment orders crater with a lag. | bullish | >95% across Samsung, SK Hynix, MU observed 2026-05-28 | 4.5 |
ASML order backlog (€B) ASML disclosed order backlog in euros. Most forward-looking indicator in the entire bubble - backlog at 18-24 months of revenue means the bubble has demand visibility through 2027+. | bullish | Qualitative: ASML no longer publishes a backlog figure; its Q3 release says order momentum continues to increase quarter on quarter and planned 2027 and 2028 supply will not fully meet demand. observed 2026-10-14 | 12 |
Equipment OEM operating margin % Industry-wide equipment OEM op margin (ASML / AMAT / LRCX / KLAC blended). Currently at decade highs (32-38%); historically these revert in the bust phase. Peak margins = late-cycle. | bearish | Higher still, GAAP latest quarter: ASML 44.4% (Q3 2026), KLA 45.0% and Lam Research 40.0% (September quarters), against 32% to 38% in May. Applied Materials not re-observed (reports mid-November). observed 2026-10-28 | 12 |
TSMC gross margin trajectory TSMC quarterly gross margin and forward guide. Downstream proxy for foundry pricing power. When TSMC GM rises, fabs can absorb equipment price increases; when it compresses, equipment OEMs lose pricing. | neutral | 66.4% in Q3 2026, after 67.7% in Q2 and 59.5% a year earlier; Q4 guided at 65% to 67%. Very high, no longer rising. observed 2026-10-15 | 3 |
Equipment OEMs vs SMH (60-day) 60-day relative return of an equal-weighted equipment basket (ASML, AMAT, LRCX, KLAC) vs SMH. Leader-vs-laggard signal: equipment names lead semis on the way up, lag on the way down. | bearish | Lagging over three months (about 63 sessions): ASML -9.1%, KLA -20.6%, Lam -26.0%, Applied -29.9%, equal weight -21.4%, against SMH -10.8% (QA data, close of 2 Nov). observed 2026-11-02 | 2 |
Leading-indicator scorecard tracking the cycle phase. 3+ bearish signals classifies as cycle turning. Methodology and full framework: memory cyclicality framework · latest reading 2026-11-02; each row shows the date it was observed
ACLS | AMAT | ASML | ICHR | KLAC | LRCX | AEHR | 3110 | |
|---|---|---|---|---|---|---|---|---|
| ACLS | · | 0.70 | 0.66 | 0.64 | 0.71 | 0.70 | 0.63 | 0.13 |
| AMAT | 0.70 | · | 0.83 | 0.73 | 0.88 | 0.91 | 0.66 | 0.18 |
| ASML | 0.66 | 0.83 | · | 0.65 | 0.82 | 0.86 | 0.64 | 0.12 |
| ICHR | 0.64 | 0.73 | 0.65 | · | 0.68 | 0.72 | 0.58 | 0.12 |
| KLAC | 0.71 | 0.88 | 0.82 | 0.68 | · | 0.88 | 0.62 | 0.17 |
| LRCX | 0.70 | 0.91 | 0.86 | 0.72 | 0.88 | · | 0.67 | 0.17 |
| AEHR | 0.63 | 0.66 | 0.64 | 0.58 | 0.62 | 0.67 | · | 0.16 |
| 3110 | 0.13 | 0.18 | 0.12 | 0.12 | 0.17 | 0.17 | 0.16 | · |
Ticker order reflects hierarchical clustering assignment. Tighter bright blocks on the diagonal = stronger sub-clusters within the bubble.
Daily net ETF creations minus redemptions across primary ETFs in the bubble. Green = capital in, red = capital out. Computed nightly from issuer NAV + shares-outstanding data.