Severe shortages of lower-end semiconductors, especially memory chips for data centers, have emerged almost unexpectedly.

Micron CEO Sanjay Mehrotra broke ground on a $100 billion facility in New York, funded partly by the CHIPS Act, to address the chip shortage.

The shortage is critical for data center chips adjacent to NVIDIA's products. NVIDIA had more foresight than Micron or others in the industry.

Forecasting the boom was difficult; a glut existed just one year ago for the same chips now in shortage.

Sanjay Mehrotra was too cautious last year, and his caution contributed to the memory shortage, as did management at Sandisk, Western Digital, and Seagate.

These companies' products caught fire due to data center demand, and their stocks have soared because there aren't enough chips.

First, prices for these chips and flash memory are still skyrocketing, causing dislocation in data centers and devices like PCs.

Second, building the new plant will take years and won't address the shortage unless demand weakens, which isn't expected.

Prices will keep going higher because only Jensen Huang and NVIDIA appreciate the scale of the opportunity.

Stocks like Micron, Western Digital, Seagate, and Sandisk have rallied massively and were the best performers in the S&P 500 last year.

Can these stocks keep going higher?

Yes, because there isn't enough equipment to expand production fast enough.

Semiconductor capital equipment makers (Applied Materials, KLA, Lam Research) also misjudged demand; their stocks are strong.

Only NVIDIA really saw it coming, partnering with TSMC for high-end chips where there's no bottleneck compared to memory.

Celebrate Micron building a foundry in America, which wouldn't have happened without the CHIPS Act.

If these managements had listened to Jensen Huang, we'd all be better off.