AI boom not shock-proof; chip shortage and weak pass-through weigh: Report - Times of Oman

While the AI boom is supported by strong cash flows, it is not immune to external shocks. Chip shortages pose a major risk, with prices up 2.5x year-on-year, inflating hyperscalers' capex and strainin... Read original →

The AI boom is hitting a hard ceiling: semiconductor supply constraints. The reliance of 3nm nodes on EUV lithography concentrates risk in TSMC and Taiwan, China’s ecosystem, where geopolitical friction and extended equipment lead times amplify fragility. Hyperscalers, unable to pass through 2.5x higher chip costs, face squeezed free cash flow—while valuations at 10x P/B echo the 2000 bubble. In response, NVIDIA may accelerate chiplet adoption to reduce advanced-node dependency, and Intel could leverage U.S. CHIPS Act subsidies to capture mature-node AI inference share. Over the next 12–24 months, as 3nm yields improve and secondary-market EUVs become available, hardware costs will likely plummet, shifting AI from capex mania to monetizable applications—a replay of the post-2003 internet value reset.