AI’s next bottleneck could be light

The artificial-intelligence investment story is usually told through processors: faster GPUs, more advanced memory and ever-larger data centres. Yet faster chips alone are unlikely to solve AI’s scaling challenges. The industry must also print increasingly complex features onto silicon and move enormous volumes of data between chips, servers and data centres without consuming too much power. Both challenges are becoming more dependent on the same physical resource: light.

That is the investment idea behind the Corgi Lithography & Semiconductor Photonics ETF (BATS:EUV). Rather than focusing primarily on the AI chip designers, EUV also targets the equipment and optical infrastructure that allow advanced chips to be manufactured and connected.

For investors seeking a different angle on AI infrastructure, the fund opens access to a specialised part of the value chain that broad semiconductor ETFs only partly capture.

Table 1: Summary of Corgi Lithography & Semiconductor Photonics ETF (EUV)

Fund detail	Latest information
Ticker / exchange	EUV / Cboe BZX
Inception	5 May 2026; listed 6 May 2026
Management style	Active and non-diversified
Holdings	30, subject to change
Expense ratio	0.35%
Assets under management	US$516.86m as of 9 July 2026
Investment objective	Capital appreciation

Source: Corgi Funds; SEC Summary Prospectus; Cboe listing page. Data as of 10 July 2026.

What is the ETF about

EUV is an actively managed, non-diversified thematic ETF listed on Cboe BZX on 6 May 2026. Under normal market conditions, it invests at least 80% of its assets in companies involved in photonics and light-based technologies. These include EUV lithography, semiconductor manufacturing and inspection tools, lasers, optical components, fibre-optic networks, imaging, sensing and lidar.

The fund may invest up to 15% of assets in illiquid investments, including minority interests in special-purpose vehicles. Corgi Strategies uses fundamental research together with thematic and quantitative screens to select holdings; the ETF does not track an index.

Table 2: Top 10 Holdings

Company	Weightage
Taiwan Semiconductor Manufacturing Co Ltd	10.29%
ASML Holding NV	9.30%
Applied Materials Inc	6.50%
Lam Research Corp	5.98%
KLA CORP	5.07%
Corning Inc	4.96%
Lumentum Holdings Inc	3.47%
Ciena Corp	3.40%
Coherent Corp	3.37%
Credo Technology Group Holding Ltd	3.32%
Top 10 total	55.66%

Source: Corgi Funds; SEC Summary Prospectus; Cboe listing page. Data as of 10 July 2026.

A different route into AI infrastructure

EUV began operations on 5 May 2026 and was listed on Cboe BZX the following day. It is actively managed, holds around 30 companies and charges an annual expense ratio of 0.35%. By 9 July, the fund had attracted USD 516.86 million in assets, an unusually fast start for such a specialised strategy. Its stated objective is capital appreciation, with at least 80% of assets normally invested in businesses involved in photonics and light-based technologies.

The mandate is deliberately broad within that theme. It covers extreme ultraviolet lithography, semiconductor manufacturing and inspection tools, lasers, optical components, silicon photonics, fibre-optic networking, imaging, sensing and enabling materials. This makes EUV more than a fund built around one product cycle. It combines the tools needed to manufacture advanced chips with the technologies needed to move data once those chips are operating.

The manager can adjust the portfolio as order visibility, valuations and competitive positions evolve, rather than waiting for periodic index reviews. The trade-off is manager risk, as investors rely on the manager's ability to identify long-term winners.

Two growth engines under one ticker

The portfolio can be understood through two main groups. The first is the semiconductor equipment and foundry segment, centred on companies such as Taiwan Semiconductor Manufacturing Company (TSMC), ASML, Lam Research, Applied Materials and KLA. Based on the holdings used in this analysis, this group represented roughly 40% to 45% of the fund. These are generally established, cash-generative companies with strong competitive positions. ASML, currently the sold commercial supplier of EUV lithography systems, while TSMC is one of the world’s largest buyers of the advanced equipment required to manufacture leading-edge chips.

Figure 1: TSMC’s illustration

Source: TSMC, SemiVision, Data as of 2 Jun 2025

Figure 2: ASML position within the semiconductor value chain

Source: ASML, Data as of end-2018.

The second group is optical components and networking, including Corning, Ciena, Lumentum, Coherent and MACOM. This segment accounted for an estimated 30% to 35% of assets. Its role is easier to understand by thinking about the limits of copper. As data speeds rise from 800G to 1.6T and beyond, electrical connections become increasingly power intensive. Optical technology uses light to move information faster and more efficiently, making it increasingly important inside AI data centres.

Co-packaged optics, or CPO, takes this development a step further by bringing optical connections closer to the chip. The potential benefit is higher bandwidth with lower power consumption. The remaining portfolio is spread across areas such as imaging, sensing, lidar and photonic materials. Together, these exposures give EUV a profile that is materially different from NVIDIA-heavy semiconductor funds.

Why the timing is compelling

Several long-term spending trends support the theme. The fund sponsor cites industry forecasts for global semiconductor equipment sales to rise from a record US$133 billion in 2025 to more than US$156 billion by 2027. It also notes that the only EUV lithography manufacturer ended 2025 with a €38.8 billion backlog after shipping 48 systems during the year. These figures point to sustained investment in the physical tools required for advanced chip production.

The optical side is being driven by a separate but related need: AI systems require ever-faster links between processors, memory and storage. Major cloud providers continue to commit substantial capital to data-centre infrastructure, while optical suppliers have reported strong demand for transceivers, switches and related components. The silicon photonics market is projected by the fund sponsor to expand from US$2.8 billion in 2025 to US$10.7 billion by 2032, equivalent to annualised growth of about 21%.

These forecasts should not be treated as guaranteed outcomes. Their importance lies in the direction of travel. As computing power increases, demand for data movement is also likely to rise, increasing the importance of optical connectivity.. The appeal of EUV is therefore not that light will replace advanced chips, but that advanced chips increasingly depend on light to be manufactured and used efficiently.

Figure 3: Silicon Photonics Market by components

Source: WissenResearch, iFAST Compilation, Data as of March 2026

Figure 4: Silicon photonics market by end users

Source: WissenResearch, iFAST Compilation, Data as of March 2026

Strong theme, but timing still matters

A strong thematic story does not remove valuation and timing risk. Optical stocks recorded large gains during the first half of 2026 before suffering sharp pullbacks when investors questioned how quickly CPO could move into volume production. Packaging yields, customer qualification and manufacturing complexity could delay broader adoption from 2027 to 2028. Such a delay may not weaken the long-term need for optics, but it could reduce near-term earnings expectations and the valuation multiples investors are willing to pay.

Table 3: EUV components 1y performance and drawdown from peak

Counter	1y performance	Recent peak	Maximum drawdown from peak
Taiwan Semiconductor Manufacturing Co Ltd	88.50%	477.57 (30 Jun)	−9.1%
ASML Holding NV	135.80%	1,721.40 (30 Jun)	−8.9%
Applied Materials Inc	201.30%	723.00 (30 Jun)	−16.7%
Lam Research Corp	253.80%	433.33 (30 Jun)	−19.2%
KLA CORP	148.60%	301.71 (30 Jun)	−23.3%
Corning Inc	266.00%	255.69 (29 Jun)	−25.3%
Lumentum Holdings Inc	768.80%	1,053.09 (11 May)	−23.8%
Ciena Corp	482.80%	627.00 (2 Jun)	−26.5%
Coherent Corp	258.60%	426.89 (2 Jun)	−24.0%
Credo Technology Group Holding Ltd	172.20%	302.52 (22 Jun)	−14.8%

Source: Bloomberg Finance L.P., iFAST Compilation, Data as of 9 Jul 2026.

The fund itself also carries structural risks. EUV is new, non-diversified and managed by an adviser without a long public fund-management record. Its prospectus permits up to 15% of assets in illiquid investments, including minority interests in special-purpose vehicles. Meanwhile, concentrated positions in TSMC and ASML create exposure to Taiwan-related tensions and evolving export controls. Because ETF shares trade in the secondary market, investors should also monitor bid-ask spreads and any premium or discount to net asset value, particularly during volatile sessions.

Where EUV fits in a portfolio

EUV is best viewed as a thematic tactical allocation rather than a replacement for a broad semiconductor allocation. Funds such as SMH and SOXX offer more direct exposure to AI processors and diversified semiconductor earnings.

EUV adds a different layer: lithography, inspection, optical components and networking. For investors who already own mainstream semiconductor exposure, that distinction can improve thematic breadth without simply adding more of the same companies.

The trade-off is higher concentration and a shorter operating history. The position should therefore be sized with its volatility and specialised mandate in mind. Investors should monitor semiconductor equipment spending, cloud-provider capital expenditure, optical order backlogs, progress in CPO manufacturing yields and the fund’s trading quality around NAV.

On top of that, Malaysian investors should also consider currency exposure. EUV is priced in US dollars, so returns in ringgit will reflect both the ETF’s performance and movements in the USD/MYR exchange rate.

A differentiated way to access AI infrastructure

EUV packages two critical bottlenecks of the AI era into one portfolio: the equipment needed to print advanced chips and the optical systems needed to connect them. That makes it a distinctive way to look beyond headline chip designers and into the infrastructure supporting the broader AI build-out.

The fund remains best suited as a satellite allocation for investors seeking differentiated exposure to the enabling technologies behind AI infrastructure, rather than as a core semiconductor holding.

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.