Compute Capacity Squeeze
Keshav Sanghi@keshav_sanghi
−17.0%
since Oct 6
The idea
I believe pricing power in AI is shifting to whoever physically owns compute capacity, the fabs, memory, and packaging lines, and away from the model labs renting it, since that capacity can't be built out in a year. This basket owns all three layers, foundries for the core bottleneck, the heaviest weight in scarce inputs like memory and packaging where the squeeze is tightest, and toolmakers as the steadier layer tied to new fab spend.
What it owns
- High-bandwidth memory, advanced packaging and test are the choke points where prices are rising right now. · Micron TechnologyIt is the US maker of high-bandwidth memory that every AI chip needs, and can sustain price increases while HBM remains scarce., Amkor TechnologyIt owns advanced packaging capacity that has been the tightest choke point in getting AI chips out the door., Onto InnovationIts inspection tools sit inside advanced packaging lines, and orders track packaging capacity expansion directly., TeradyneEvery AI chip and HBM stack has to be tested before it ships, and it supplies the testers that scale with compute buildout., CamtekIt inspects high-bandwidth memory stacks, so its orders rise with every new HBM line that gets built., EntegrisIt sells the materials and handling products every running fab consumes daily, collecting a toll on all capacity that gains pricing power., FormFactorIt makes the probe cards used to test memory and advanced chips, a consumable business that scales with HBM and AI chip volume.38%
- Every new fab built to ease the shortage pays these companies first, whoever ends up owning it. · ASML HoldingEvery new leading-edge fab gets built with its machines, so it gets paid first on capacity expansion as long as EUV orders keep growing., Applied MaterialsIt sells the widest range of tools that go into any new fab, so it gets paid on the capacity buildout across the industry., Lam ResearchIts etch and deposition tools are what memory makers buy when they expand high-bandwidth memory capacity., KLA CorporationIts inspection tools are how fabs turn raw capacity into sellable chips, and new capacity ramps depend on its yield solutions., Veeco InstrumentsIt makes deposition tools for advanced packaging, one of the three bottlenecks, and moves with packaging capacity spending.31%
- The companies that own the fabs set the price of every AI chip made in them. · Taiwan Semiconductor ManufacturingIt owns the most advanced fab capacity on earth and can raise prices on AI chips as long as leading-edge production stays sold out., GlobalFoundriesIt owns trailing-edge fab capacity that AI systems still need for power, connectivity and analog chips around the main processors.18%
- Other · SKHY7%
- Cash6%