AI chip supply-demand dynamics and government backing (with Dani Burger)

Mandeep Singh explains that the recent pause in AI enthusiasm is a breather, not a fundamental shift. Micron's results surprised on the upside, and the key bottleneck is memory supply, which won't ease before 2027-2028. Government backing for SK Hynix and Samsung capacity expansion is crucial, as sovereigns want their own AI capabilities. The demand for memory remains strong even with open-source models.

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AI chip supply-demand dynamics and government backing (with Dani Burger)

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Singh describes the current situation as a 'breather' and a 'pause' in enthusiasm, not a fundamental shift. He expects the supply-demand imbalance to persist for a while, suggesting no sharp directional move in the near to medium term.

The Mag Seven is in a correction, and chip stocks didn't rally enough on Micron's results. Has something changed?

Dani Burger
Mandeep Singh

No fundamental change; it's a breather. Micron's results were strong, and the key is that hyperscalers are signing supply chain agreements to lock in capacity and pricing.

SK Hynix and Samsung are getting government backing for $800 billion investment, with assurance against market changes, which is crucial for capacity expansion.
Is there a timing mismatch between huge spending outlays and corporate conversations about cost-cutting and open-source models?

Dani Burger
Mandeep Singh

Companies anticipated this demand; it's surprising they didn't expand capacity earlier. Even with open-source models, memory is still needed. New capacity won't come online before second half of 2027 or 2028.

The supply-demand imbalance will persist for a while.
How big is government involvement in AI, given South Korea's push and Anthropic's agreement with the White House?

Dani Burger
Mandeep Singh

Government involvement is huge. Every sovereign wants its own AI. South Korea is investing its own money, similar to how TSMC benefited from Taiwan's involvement.

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