Two layers, held independently.
The cohort holds chip-layer names (NVTS / TXN at L8b–L8c) and grid/system-layer names (ETN / VRT at G1–G4) as independent positions, not as a chain. Box-builders are vendor-agnostic on power-semi supplier by commercial design. ETN orders do not mechanically translate into NVTS or TXN P&L.
Why we hold two layers, not one chain.
Per the C-COHERENCE pass: NVIDIA GTC March 2026 named VRT, ETN, and Schneider all at the systems tier, and TI exclusively at the silicon-anchor tier. No box-builder names a power-semi partner by commercial design. Eaton's customer-analyst confirmed: ETN purchases IGBTs/GaN/SiC on a competitively sourced basis and does not name power-semi suppliers. The chip-to-grid frame justifies why these names are researched together, not because their P&Ls flow mechanically through each other.
The ETN+VRT cap rule, visualized.
The cohort's largest residual risk is AI-capex single-factor concentration. ETN (16–19% AI-DC mix, growing toward 22–26% post-Mobility spin) and VRT (65–80% AI-DC mix) are both AI-capex amplifiers. Holding both alongside NVDA and AVGO means a sustained hyperscaler capex pause hits the cohort from the top (accelerator revenue) and the bottom (infrastructure revenue) simultaneously. The cap rule is the portfolio-construction mechanism that prevents the AI-capex amplification from becoming a single-factor bet wearing two tickers.
scenario-stress.md §3 (per-scenario quantification of cap-rule value). Net long exposure at base sizing: ~15.25% NAV.Pair structures.
Pair 1 · TXN long / NVTS long — 1:3 in TXN's favor.
2.5% NAV · vertical-integration anchor at L8b+L8c. System-BOM bet captures the 1,500+ analog SKUs around the headline GaN socket. ~5–7% discrete GaN device share. Dividend yield 2.0%. Lower-beta, higher-conviction expression.
0.75% NAV · density bet at L8b. Single-stage 800V-to-6V GaN-IC architecture. ~17% global GaN share, #2. Higher-beta, asymmetric upside on Kyber design-in conversion. Pair breaks at TXN $210.
Pair 2 · ETN long / VRT long — concentration trade, not hedge.
1.75% NAV (buy on weakness; full size below $360) · 16–19% AI-DC mix growing to 22–26% post-Mobility spin. Utility T&D + industrial + aerospace floor. 27.9× EV/EBITDA. Lower bear-case drawdown (−27 to −36%).
1.25% NAV (probe at $330) · 65–80% AI-DC mix · 32% ROIC · 2.9× book-to-bill. 53.4× EV/EBITDA = 91% premium to ETN — the entire problem. Bear case −42 to −54% on multiple compression alone.
Pair 3 · WOLF short / ON long — SiC structural break + selective long.
1.0–1.5% NAV gross short · substrate share collapse 60% → 34% over 36 months. May–July 2026 window: Q3 FY26 + $575M refi + CHIPS PMT resolution stack. Cohort's only clean cross-scenario hedge.
~1.5–2.0× WOLF gross · onsemi (not yet deep-dived) · Qorvo SiC JFET acquisition; AI-DC revenue >$250M in 2025. Strengthening competitive position in same end-market.
Pair 4 · INTC short / TXN long — foundry leadership + embedded analog.
0.5–0.75% NAV · structurally-impaired-IDM betting on 14A binary · −$48B cumulative FCF · ROIC ~0.7% vs WACC 12.7% · foundry external book press-release-grade
2.5% NAV · vertical-integration-with-CHIPS-subsidy thesis · ~$6.6B PV from CHIPS + §48D + state subsidies · 95%+ internal manufacturing by 2030 · no foundry ambiguity
Pair 5 · TSM long / INTC short — the foundry leadership pair (structural).
The cleanest structural-divergence expression in the cohort. TSM 90% leading-edge logic share + CoWoS-L chokepoint vs INTC −$48B cumulative FCF on 14A binary. Purely process-node · not Section-232-mediated. Sized: TSM 4.5% NAV / INTC −0.65% NAV gross short (asymmetric in TSM's favor reflects asymmetric conviction).
Layer coverage · what's owned, what's a gap.
Cohort coverage by chip-to-grid layer. Two explicit gaps identified by the B1 watchlist refresh: L4 (memory) closes with SK Hynix; L1 (litho/WFE) closes with ASML. Both are the highest-priority next deep-dive candidates per the B1 sequencing recommendation.
| Layer | Layer name | Cohort name(s) | Coverage |
|---|---|---|---|
| G0 | Power generation / grid | — out of scope · tracked via Crucible privates (Shatterdome · Oklo · Bloom) | By design |
| G1 | Site / utility interface | ETN (primary) · VRT (UPS/ATS subset) | Covered |
| G2 | DC backbone | VRT · ETN (overlapping) | Covered |
| G2T | Cooling / thermal | VRT (incumbent ~22% CDU) · ETN/Boyd · Ecolab/CoolIT (bench) | 3-way |
| G3 | 800V transition layer | ETN · VRT · VRT H2 2026 launch is primary catalyst | Covered |
| G4 | Rack / row power | VRT · connector layer (TE · APH) uncovered | Partial |
| L8a | SiC (HV front end) | WOLF short · ON paired-long on bench | Short-only |
| L8b | GaN (high-density conversion) | NVTS (density) · TXN (system-BOM vertical) · Innoscience #1 + IFX uncovered | Two expressions |
| L8c | Board-level power | TXN · MPWR uncovered (bench) | Partial |
| L8d | MOCVD equipment | — AIXTRON · Veeco watch-tier | By design |
| L7 | Networking / optics | NVDA (NVLink · IB) · AVGO (Tomahawk) | Covered |
| L6 | Compute / accelerators | NVDA · AVGO · INTC (short) | Covered |
| L5 | Advanced packaging | TSM (CoWoS-L) · INTC (EMIB · Foveros · short) | Covered |
| L4 | Memory (HBM · DRAM · NAND) | — None — SK Hynix on bench (next add) | GAP |
| L3 | Foundry / process | TSM (90% leading-edge) · INTC (foundry pivot · short) | Covered |
| L2 | EDA | — Cadence · Synopsys watch-tier · no deep-dive planned | By design |
| L1 | WFE / lithography | — None — ASML on bench · top single completion candidate | GAP |
| L0 | Materials / gases | — Shin-Etsu · SUMCO · SUPRA (Crucible) watch-tier | By design |
Cohort net direction: 7 longs / 2 shorts. Layer coverage on the long side genuinely broad (G1 through L7). The two gaps (L4 memory, L1 WFE) are the highest-priority next deep-dive candidates — both already conviction-5 / +2-sentiment names sitting on the bench. The cohort does not hedge Taiwan-tail through the shorts (INTC and WOLF hedge foundry-leadership and SiC structural-share respectively); Taiwan-tail is materially closed instead by the TXN/ETN/VRT inclusion (low-to-zero Taiwan production exposure).
What this architecture does and does not protect against.
NAV in names where AI-capex pause is the dominant bear-case mechanism (NVDA 4.0% · AVGO 2.5% · ETN 1.75% · VRT 1.25%). At −35% drawdown on this group: −3.3% NAV. The ETN+VRT cap rule is the containment mechanism.
VRT CDU share (~22% pre-M&A) contested by ETN/Boyd ($1.7B closed Mar 2026) and Ecolab/CoolIT ($4.75B). Quarterly bookings monitor required. 5+ ppt VRT loss over 2 quarters = trim to sub-1% NAV.
GOES (ETN's gating) and HFO refrigerants (VRT's gating) gate calendar conversion of orders to revenue independent of demand. Order disappointment driven by chokepoint-limited production, not demand, is "add on weakness" not exit.
25% Section 232 scenario adds annual COGS to ETN with only partial pass-through. VRT's Mexicali also exposed. Cohort risk-matrix gap not in the prior Taiwan/China framing.
FY26 revenue at meaningful adverse-outcome risk on Sept 13 2026 final determination. Largest near-term asymmetric binary in any cohort long. Hold TXN at 1/2–2/3 size through Q3 2026.
Q1 2026 YoY in second-largest market — first geographic crack in the AI-DC order story. Two more negative quarters confirm structural Schneider share loss; one quarter is timing.
Read next
Pair-related ticker pages
Source memos
- § portfolio-summary.md · §2 sizing + §4 pairs + §5 risks
- § synthesis.md · §0 cohort scope · §6 architecture finalization