The Semiconductor Squeeze Cracked, And The Two-Year Treasury Wouldn’t Rally - Mott Capital Management

The recent easing of semiconductor supply chain constraints has created significant market implications, though two-year Treasury yields have not rallied as expected. This development reflects complex... Read original →

The easing of wafer fab bottlenecks has triggered a technical cascade: demand for advanced packaging and EDA tools is surging, while equipment makers like ASML and Lam Research shift orders toward high-NA EUV and atomic layer deposition systems. Yet compliance burdens are mounting—U.S. export controls and the EU Chips Act’s localization mandates force TSMC (Taiwan, China) and Samsung to reconfigure global fab footprints, lifting operating costs by 15–20%. Strategic rivalry is pivoting from capacity to technological sovereignty: Intel leverages subsidies to accelerate its 20A node, while SMIC doubles down on mature-node domestic substitution. Over the next 12–24 months, a 'false recovery' will trigger sectoral consolidation—only firms mastering sub-3nm yield and heterogeneous integration will survive the cycle. The muted Treasury rally signals capital rotation out of broad tech into policy-driven assets.