Eventually the music will stop when the easy money runs out and we'll see how much people are truly willing to pay for AI.
Everything was cheap. Samsung sold SSDs at a loss that year.
TSMC and other suppliers did not invest as much in cap ex in 2022 and 2023 because of the crash.
Parts of the shortage today can be blamed by those years. Of course ChatGPT also launched in late 2022 and the rest is history.
[0]www.trendforce.com/presscenter/news/20221123-11467.html
Not to mention that without enough competition, you can just raise prices, which, uh (gestures at Nvidia GPU price trends...)
They didn't spin up additional mask production b/c they knew the pandemic would eventually pass. They learned this lesson from SARS.
Not maxing out production during spikes (or seasonality) in demand is a key tenet of being a "rational economic actor".
Last week: “TSMC's board approves $45 billion spending package on new fabs”
https://www.tomshardware.com/tech-industry/semiconductors/ts...
$45 billion for new fabs is peanuts compared to Amazon's $200b and Google's $180b investment in 2026.
Can't really blame TSMC though. It takes years for fabs to go from plan to first wafer. By the time new fabs go online, demand might not be there. Who knows?
Seems legit to me. Nonetheless, I think it's a solvable problem.
If big tech prepays for the entire fab, I think TSMC would do it.
OTOH, if they are insisting on not investing their funds or stock, and it is simply pressure on TSMC to take on the risk, TSMC should be very wary of taking on risk for those players (unless TSMC sees another advantage of producing into a likely glut or supply canyon shortly after the new fabs come online).
But as it is it's not like they made any bad decisions either.
And if they were running 24/7, maybe setting up another factory or line will avoid some of the 24/7 scheduling.
I don’t quite follow the narrative like yours about nation states and investors. There is certainly an industrial bubble going on and lots of startups getting massive amounts of capital but I here is a strong signal that a good part of this demand is here to stay.
This will be one of those scenarios where some companies will look brilliant and others foolish.
These contracts are then transferrable. The manufacturer can start work on a factory knowing they'll get paid to produce the drives.
If the AI boom comes to an end, the manufacturer is still going to get paid for their factory, and if the AI company wants to recoup costs they could try to sell those contracts back to the manufacturer for pennies on the dollar, who might then decide (if it is more profitable) to halt work on the factory - and either way they make money.
Every year a few farmers realize they are contracted to deliver more grain than they have in their bins and so have to buy some grain from someone else (often at a loss) just to deliver it. This isn't a common problem but it happens (most often the farmer is using their insurance payout to buy the grain - snip a very large essay on the complexities of this)
You are also forgetting that the payback period on a plant is not a single year, it will be over many years and most likely no buyer is wanting to arrange purchasing that far out.
I don’t see how what you described sounds is set in reality even for “smart manufacturers”.
So there is always use for more compute to solve problems.
Fiber installations can overshoot relatively easily. No matter how much fiber you have installed, that 4k movie isn't going to change. The 3 hours of watch time for consumers isn't going to change.
There are still plenty of problems that having more tokens would allow them to be solved, and solved faster, better. There is no absolutely no way we've already met AI compute demands for the problems that LLMs can solve today.
Everything is either random, deterministic, or some shade of the two. Human brain "magic" included.
Hardware just depreciates much much faster than fiber
If it drops for a year, they're likely to start shedding capacity, one way or another.
This is not an equivalent situation. The vast, vast majority of what's being produced for this bubble is going to be waste once it pops.
Then you can leach precious metals from the PCB itself.
This sounds like economic dogma based on pointing at some future equilibrium.
I like the saying that goes something like "life is what is happens when you are waiting for the future". In the same way, it seems to me that equilibrium is increasingly less common for many of us.
Markets are dynamic systems, and there are sub-fields of economics that recognize this. The message doesn't always get out unfortunately.
> But with AI being massively subsidized by nation-states and investors, there's no price that is too high for these supplies.
This feels like more dogma: find a convenient scape-goat: governments.
Time to wake up to what history has shown us! Markets naturally reflect boom and bust cycles, irrationality of people, and various other market failures. None of these are news to competent economists, by the way. Be careful from whence you get your economic "analysis".
.....
My point is that directly or indirectly all hardware companies depend on memory and storage. If AI companies fall this could have repercussions to the whole industry.
Why gamers must be the most important group?
The above was their prediction during the crypto boom and it turns out correct. I'm not sure how AI will turn out, but it isn't unreasonable to predict that AI will also move to dedicated chips (or die?) in a few years thus making gamers more important because gamers will be buying GPUs when this fad is over. Though of course if AI turns out to be a constant demand for more/better GPUs long term they are more important.
Gamers are not the only important GPU market. CAD comes to mind as another group that is a consistent demand for GPUs over the years. I know there are others, they are all important.
they don't need CUDA, they don't need the 10 years of weird game support, even the networking tech
they need none of nvidia's technology moats
exactly same as the crypto, where they just needed to make an ASIC to pump out sha1 as quickly as possible
which is really, really easy if you have a fab contract
at which point their use of nvidia dropped to zero
Mass surveillance by corporations can be outlawed. Just because something is possible, doesn’t mean it must be necessarily so.
I travel a lot for work to different nations. The cultural differences are stark.
In the UK for example, they love their CCTVs. In Switzerland, they’re only allowed where they are deemed necessary.
As much as we expound about the rule of law, might makes right if the population isn't vigilant. Simply put technology gives capability. In 1900 we didn't have the capability to monitor everything that everybody did all the time and keep those records their entire life. Now we have technology that can do just that.
This has nothing to do with the law. Zip, zilch, nada. Switzerland is one dark day away from having all their behaviors recorded by businesses/governments.
At the end of the day legality is a theoretical construct, and technological capability is reality.
The problem with this AI stuff is we don't know how much we will be willing to pay for it, as individuals, as businesses, as nations. I guess we just don't know how far this stuff will be useful. The reasons for the high valuation is, in my guess, that there is more value here than what we have tapped so far, right?
The revenues that nVidia has reported is based on what we hope we will achieve in the future so I guess the whole thing is speculation?
> The problem with this AI stuff is we don't know how much we will be willing to pay for it, as individuals, as businesses, as nations. I guess we just don't know how far this stuff will be useful. The reasons for the high valuation is, in my guess, that there is more value here than what we have tapped so far, right?
I think the value now comes on how we make a product of it, for example, like OpenClaw. Whether we like or not, AI is really expensive to train, not only in monetary value but also in resources, and the gains have been diminishing with each “generation”. Let's not forget we heard promises that have not been fulfilled, for example AGI or “AI could potentially cure cancer, with enough power”.
And that's not even talking about the head spinning rate robotics is advancing. The hardware we use for LLMs is also being used in robot simulation for hardware training that gives results in hours that took weeks or months in the past.
There's clearly easy/irrational money distorting the markets here.
AI will cause shortages in everything from GPUs to CPUs, RAM, storage, networking, fiber, etc because of real demand. The physical world can't keep up with AI progress. Hence, shortages.
AI simply increases computer use by magnitudes. Now you can suddenly use Seedance 2.0 to make CGI that would have cost tens of millions 5 years ago for $5.[0] Everyone is going to need more disk space to store all those video files. Someone in their basement can make a full length movie limited only by imagination. The output quality keeps getting better quicker.
AI agents also drastically increase storage demands. Imagine financial companies using AI agents to search, scrape, organize data on stocks that they wouldn't have been able to do prior. Suddenly, disk storage and CPUs are in high demand for tasks like these.
I think the demand for computer hardware and networking gear is real and is only the beginning.
As someone who is into AI, hardware, and investing, I've been investing in physical businesses based on the above hypothesis. The only durable moats will be compute, energy, and data.
"Compute" is capital investment; normal and comprehensible, but on a huge scale.
"Data" is .. stolen? That feels like a problem which has been dodged but will not remain solved forever, as everyone goes shields-up against the scrapers.
"Energy" was a serious global problem before AI. All economic growth is traded off against future global temperature increases to some extent, but this is even more acute in this electricity-intensive industry. How many degrees of temperature increase is worth one .. whatever the unit of AI gain-of-function is?
Billionaire. And they are definitely willing to make the trade.
If AI will permanently cause an increase in hard drives over the current growth curve, then WD, et al will build new capacity, increasing supply (and reducing costs). But this really isn’t something that is known at this point.
By the way, plenty of people on HN and Reddit ask if the demand is real or not. They all think there's some collusion to keep the AI bubble going by all the companies. They don't believe AI is that useful today.
The time horizon for this is murky at best. This is something you think, but can’t know. But, you’re putting money behind it, so if you’re right, you’ll make a good profit!
But for the larger companies (like WD), over building capacity can be a big problem. They can’t plan factory expansion based on what might be a short term bubble. That’s how companies go out of business. There is plenty to suggest that you’re right, that AI will cause permanently increased demand for computing/storage resources. Because it is useful and does consume and produce a lot of new data and media.
But I’m still skeptical.
The massive increase in spending can’t be sustainable. We can’t continue to see the AI beast at this rate and still have other devices. Silicon wafer fabs can’t be built on demand and take time. SSD/HD factories take time. I think we are seeing an expansion to see who the big players will be in the next 3-5 years. Once that order has been established, then I think we will fall back to more sustainable rates of demand. This isn’t collusion, it’s just market dynamics at play in a common market. Sadly, we are all part of the same pool and so everything is expensive for all of us. At some point though, the AI money will dry up or get more expensive. Then I think we’ll see a reversion back to “normal” demand, maybe slightly elevated, but not the crazy jump we’ve seen for the past two years.
To use an analogy, imagine you're a small fluffy mammal that lives in fertile soils in open plains. Suddenly a bunch of humans show up with plows and till you and your environment under to grow crops.
Maybe the humans suddenly won't need crops any longer and you'll get your territory back. But if that doesn't happen and a paradigm change occurred you're in trouble.
The most important question is are we in 1994 or 2000 of the bubble for investors and suppliers like Samsung, WD, SK Hynix, TSMC.
What about 10 years from now? 15 years? Will AI provide more value in 2040 than in 2026? The internet ultimately provided far more value than even peak dotcom bubble thought.
Maybe now we will start to see the "optical" CPUs start to be a thing. Or the 3D disk storage,;or other ground breaking technology.
And even if there were guaranteed to be non-deterministic, there is still lots of value in many aspects of content generation.
What if in the near future it is simply too expensive to own "personal" computers? What if you can no longer buy used computers from official channels but have to find local shops or sharpen up on soldering skills and find parts from dumps? The big techs will conveniently "rent out" cloud computer for us to use, in exchange of all of your data.
"Don't you all have cellphones?"
Once the phone makers realize that they can sell phones and docking stations to businesses because 90% of knowledge work seems to happen in a web browser through one SaaS or other I think personal computers will be cooked.
I probably will only need to return newest laptop if I leave the company.
Also pulling and shredding hard drives is cheaper than paying someone to run DBAN or equivalent (which can take many hours to complete on a large drive), and there's no easy way to securely erase an SSD if it wasn't encrypted from the beginning.
Is the profitability of these electronics manufacturers more likely than the companies that are buying up all their future inventory?
If AI has a bubble burst, you could see a lot of used hardware flood the market and then companies like WD could have a hard time selling against their previous inventory.
If it's long term, it would be better to be the front runner on additional capacity, but that's assuming continuous growth. If it all comes down, or even just plateaus, it's better to simply raise prices.
And if they produce lot of video, they might keep copies around.
https://www.washingtonpost.com/technology/2026/01/27/anthrop...
I was toying with getting a 2T HDD for a BSD system I have, I guess not now :)
I don't know if TSMC has anything to do with hard drive production, but the reliance on very few players is also a problem in that industry.
Isn't this just taking the oft-proposed explore vs exploit dichotomy to the logical conclusion of the "exploit" side?
Every single arbitrarity-finely-divided thing "should" be handled by the single (group|process) that has the greatest relative advantage at that one thing.
And you end up with the total variety/detailedness of everything matching what the substrate of the economy (ie, people with specialized training or education) has capacity to support. So at the limit there is at most one person who knows how to do any one specific thing.
(And the global economic system becomes infinitely fragile, but eh who's counting.)
Indeed, investors left to their own devices act in this way. Underlying such a single point-of-failure is an implied but immense hope and thus pressure for stability. I wonder what the prediction markets saying about current levels of geopolitical stability in Taiwan?
Interesting. Capitalism is often touted to be more decentralized than socialism, but this is an example of how it can centralize.
Turns out letting a bunch of MBAs plan your economy is extremely foolish.
As for plagiarism, it is not something to even consider when writing code, unless your code is an art project. If someone else's code does the job better then yours, that's the code you should use, you are not trying to be original, you are trying to make a working product. There is the problem of intellectual property laws, but it is narrower than plagiarism. For instance, writing an open source drop-in replacement of some proprietary software is common practice, it is legal and often celebrated as long as it doesn't contain the original software code, in art, it would be plagiarism.
Copyright laundering is a problem though, and AI is very resource intensive for a result of dubious quality sometimes. But that just shows that it is not a good enough "plagiarism machine", not that using a "plagiarism machine" is wrong.
If I copy work from someone else, whether that be a paragraph of writing, a code block or art, and do not credit them, passing it off as my own creation, that's plagiarism. If the plagiarism machine can give proper attribution and context, it's not a plagiarism machine anymore, but given the incredibly lossy nature of LLMS, I don't foresee that happening. A search engine is different, as it provides attribution for the content it's giving you (ignoring the "ai summary" that is often included now). If you go to my website and copy code from me, you know where the code came from, because you got it from my website
Modern society seems to assume any work by a person is due to that person alone, and credits that person only. But we know that is not the case. Any work by an author is the culmination of a series of contributions, perhaps not to the work directly, but often to the author, giving them the proper background and environment to do the work. The author is simply one that built upon the aggregate knowledge in the world and added a small bit of their own ideas.
I think it is bad taste to pass another's work as your own, and I believe people should be economically compensated for creating art and generating ideas, but I do not believe people are entitled to claim any "ownership" of ideas. IMHO, it is grossly egoistic.
The ones who spend billions on integrating public cloud LLM services are not the ones writing that function. They are managers who based on data pulled out of thin air say "your goal for this year is to increase productivity by X%. With AI, while staffing is going slightly down".
I have to watch AI generated avatars on the most boring topics imaginable, because the only "documentation" and link to actual answer is in a form of fake person talking. And this is encouraged!
Then the only measure of success is either AI services adoption (team count), or sales data.
That is the real tragedy and the real scale - big companies pushing (external!) AI services without even proof that it justifies the cost alone. Smooth talking around any other metric (or the lack of it).
The replacement arrived also in a paper bag and went straight back, this time for a refund.
I guess I should have kept that one and hoped for the best.
Good alternatives? I’ve only recently been enlightened on how profoundly sh__ty SSD is for long-term storage and I have a whole lot of images my parents took traveling the last few years of their lives.
And I’m not keen on having anyone ship me one of these anymore.
Walmart sells what appears to be an older version of the drive and I might have to cross my fingers and just get one of those.
Isn't that what you're doing ordering off amazon with their comingled inventory?
Besides, there's a spectrum of sellers between "Amazon" and "anybody", you can even, perhaps, purchase directly from the manufacturer.
It’s building materials being in short supply when there’s obviously more houses than buyers. That’s just masked at the moment because of all the capital being pumped in to cover for the lack of actual revenue to pay for everything. The structural mismatch at the moment is gigantic, and the markets are getting increasingly impatient waiting for the revenue to materialize.
Mark this post… in a few years folks will be coming up with creative ideas for cheap storage and GPUs flooding the market after folks pick up the pieces of imploded AI companies.
(For the record, I’m a huge fan of AI, but that doesn’t mean I don’t also think a giant business and financial bubble is about to implode).
COVID was six years ago. In that time, GPU prices haven't gone down (and really have only increased). Count me skeptical that there will be a flood of cheap components.
> It’s building materials being in short supply when there’s obviously more houses than buyers.
That I think is a hard one to prove and is where folks are figuring it out. There is obvious continued demand and certainly a portion of it is from other startups spending money. I don’t think it’s obvious though where we are at.
6-7 years ago when GPU prices went up, I hoped nothing would break. Last year when RAM prices went up I did the same. Now with drive prices going up, it's the same thing.
It's interesting because I've always built mid-tier machines over the years and it was in the neighborhood of ~$700 at the time. Now the same thing is almost double that but the performance is no where near twice as good for general computer usage.
On the otherhand lots of people here are even more uncomfortable of the other option, which is quite possible: AI software algorithms may scale better than the capacity of companies that make the hardware. Personally I think hardware is the harder to scale from the two and this is just the beginning.
One can only hope that that's the principle at work here, anyway. It could also be a critically damped system for all I know. Unfortunately I studied control systems too...
On other hand if there is bigger economic turmoil that might mean that the postponed demand does not realise as there is no purchasing power...
I would love if more non-traditional economists got involved in the public sphere by which I mean: writing about economic trends, public policy, regulation, rate-adjustment, etc.
I'd have thought HDDs aren't at the top of the list for AI requirements, are other component manufacturers struggling even more to meet demand?
If we weren’t talking about AI, was there another high demand sector / customer for spinning platters?
And their margins get fat now that supply is relatively constant but AI demand has saturated their current production numbers.
thanks, AI-boosting motherfuckers, thanks a lot
Well, at least they might still have a product to sell once the AI bubble pops, unlike with NVIDIA which does seem to kinda forgot to design new consumer GPUs after getting high on AI money.
Spoiler from the future: it hasn't. Get your investments in while you have time.
Yes, AI is nice, but I also like to be able to buy some RAM and drives…
There is one exception though. Open WebUI with a whopping 960 MB. It's literally a ChatGPT interface. I'm only using external API providers. No local models running.
Meanwhile my website that runs via my own Wordpress-like software written in Rust [1] requires only a few MB of RAM, so it's possible.
More likely a couple of big financing wobbles lead to a fire sale.
It isn't practical for HDD supply to be wedged because in 5 years the disks start failing.