"The defining characteristic of the semiconductor giga cycle is that the market expansion is large enough to create greenfield opportunities across every segment of the value chain," says Creative Strategies, presenting the combined effect as a moment where every segment is growing in unison rather than a cycle concentrated in any particular area.
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Luke James Social Links Navigation Contributor Luke James is a freelance writer and journalist. Although his background is in legal, he has a personal interest in all things tech, especially hardware and microelectronics, and anything regulatory.
vanadiel007 What goes up, must come down. Big rise, big fall. This pace is simply not sustainable and money eventually will cap out, especially once it's measured in Trillions of USD rather than Billions of UDS. Reply
Sluggotg The costs associated with these AI farms is beyond what most will make on them. The initial financing, with the huge amount of interest on such large loans combined with the insane electrical requirements to keep them running will require a dramatic amount of money coming in to keep it operating. What AI Farms are actually making money? This is just like the Dot Com bubble. Billions were blindly invested in businesses that had something to do with the internet, most of which were a total bust. (There were certainly winners too). I do believe that in 5 years or so, the cost of chip production will drop to very low levels due to all the facilities being financed by AI investment right now. Maybe we will get affordable DIMMS and Graphics Cards again? (Wishful thinking on my part). Reply
Flemkopf Sluggotg said: The costs associated with these AI farms is beyond what most will make on them. The initial financing, with the huge amount of interest on such large loans combined with the insane electrical requirements to keep them running will require a dramatic amount of money coming in to keep it operating. What AI Farms are actually making money? This is just like the Dot Com bubble. Billions were blindly invested in businesses that had something to do with the internet, most of which were a total bust. (There were certainly winners too). I do believe that in 5 years or so, the cost of chip production will drop to very low levels due to all the facilities being financed by AI investment right now. Maybe we will get affordable DIMMS and Graphics Cards again? (Wishful thinking on my part). Wikipedia is quoting about a half trillion in investments in telecoms leading up the the dot com bubble burst. I have no idea what the AI buildout is at, but it's something stupidly massive. I too suspect that silicon prices will plummet sometime in the next few years, but what do I know about how the corporate boards want their half-trillion dollar companies managed? I'm just hoping that we can get power prices back to something reasonable when this is all over. Nothing like gigawatt service being set up and then abandoned to make finances for utilities unstable. Reply
George³ It is possible that artificially inflated hardware prices will fall, but I do not believe that products containing transistors will fall much below the prices before they were inflated. Production with edge lithography will continue to increase in price per processor, and although the cost of production is still well below the selling price, companies will want to be able to pay all their costs, not just the silicon baking, and make a profit that will satisfy shareholders and have money for R&D and pay for the production of the next generations. Reply
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/semiconductor-industry-enters-giga-cycle-as-ai-infrastructure-spending-reshapes-demand#main
- https://www.tomshardware.com
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- Nvidia Dawn and Dusk demo PC resurfaces alongside its original FX 5950 Ultra graphics card — state-of-the-art dream machine made gamers' hearts race in 2004
- Intel's upcoming Core Ultra X9 388H is up to 8.7% faster for 1T perf than Ryzen AI Max+ 395 — Panther Lake gains significant ground on Strix Halo in early Geekb
Informational only. No financial advice. Do your own research.