The Index Machine's Vote — The Week 00918 Cut Its H1 Champions, the Wafer-Only ETF Held +128% YTD, and TSMC's A14 Booked Its First Named Customer

Lead — Three signals, one direction

The first trading week of H2 2026 erased the question "who rallied hardest in H1" and replaced it with "who stays in the top-5 buy list." The signal came from three simultaneous places on July 2-3. Morgan Stanley's Asia-Pacific semiconductor deep-dive kept the sector 'Attractive' but officially declared the broad-based upcycle dead, leaving only TSMC and MediaTek as top picks. Taiwan's 00918 dividend ETF completed its mid-year rebalance by kicking out Yageo (H1 +397%) and UMC (H1 +234%) among 13 exits, refilling with AI-server value chains. Foreign funds sold NT$141B (≈US$4.3B) in Taiwan equities in a single week. Meanwhile the 00913 Wafer Manufacturing ETF held +128.49% YTD as of July 3, first among all non-leveraged Taiwan ETFs.

Two Index Machines, Same Destination

00918 punished its H1 champions not for underperformance but for outperformance: Yageo's +397% and UMC's +234% inflated denominators and diluted dividend-yield inputs. The official reason is a rulebook mechanic. The direction is unambiguous — capital is being pulled out of broad-based semis and reconcentrated into AI compute. On the other side, 00913 — a TSMC- and foundry-heavy wafer-only index — holds Taiwan's non-leveraged ETF crown at +128% YTD. Two index machines built on opposite rules arrived at the same conclusion: concentrate in foundry and AI compute, trim everything else.

Sell-Side Still Buys Memory. Flows Don't Care.

This week's consensus-versus-flow split ran wider than any point in H1. FactSet's 14-analyst poll lifted Nanya (2408) to NT$495 from NT$465.5 (+6.3%) and raised its 2026 EPS consensus to NT$53.66. An 11-analyst poll pushed Winbond (2344) to NT$236 from NT$200 (+18%), with the high estimate at NT$285 and 10 of 11 analysts bullish. MediaTek (2454) 2026 EPS was lifted to NT$66.55 with a NT$5,350 target. Nanya's June revenue printed +621% YoY at NT$29.4B — real cash growth. And yet the ETF machinery dumped every non-compute name it could reach. Either the sell-side is behind the price, or the sell-side is right and the next six months of risk-reward is already priced in. This week's tape voted for the latter.

The Survivor — TSMC and the A14 Anchor

Only TSMC (2330) drew both the consensus and the flows in the same direction. Goldman Sachs raised its target from NT$2,750 to NT$3,000 and lifted 2027 N3 capacity to 200K wpm (+5% vs prior). UBS pushed to NT$3,400. TSMC closed at NT$2,465 on July 2, leaving +38% to the UBS target. And this week TSMC's A14 process picked up its first named commercial customer — Japan's Socionext will tape out a multi-core AI data-center SoC on A14 in September 2026. That's the anchor: the concentration trade needs a next-node commercial thesis to sustain itself past 2027, and Socionext just supplied one. Beyond TSMC, the top-pick bench is one name deep — MediaTek. The sort is complete: TSMC and everyone else.