Ep. 022 - Market Drawdown, Historic Bubbles, Funding The Buildout, AI Politics (Doug is Back)

Ep. 022 - Market Drawdown, Historic Bubbles, Funding The Buildout, AI Politics (Doug is Back) – SemiAnalysis Weekly

Market views

Bullish

MEMORY— Memory demand remains strong despite recent drawdown, with supply still constrained and LTAs (Long-Term Agreements) indicating sustained pricing power. The cycle is expected to be bigger, longer, and stronger than past cycles.
AIMODELS— AI model demand is expected to remain very strong for an extended period, driven by continuous model improvements, expanding use cases beyond coding (drug discovery, material science), and increasing adoption across users and usage patterns.
DATACENTER— Data center construction is creating broad economic participation with sustainable jobs in rural areas, supported by strong community approval and structural demand that is expected to continue growing.

Bearish

MEMORY— Memory stocks experienced massive momentum rally through Q2 followed by sharp drawdown. SK Hynix missed earnings, shifted to lower-priced LTAs, and the rate of price increases is decelerating from 3x to 30-50%, which historically signals cycle end.
KOREA— South Korean market experiencing extreme volatility with daily limit hits, reminiscent of historic Asian bubbles. Korean investors have a pattern of buying at market tops with excessive leverage, leading to widespread losses.
H100— Older GPU models like H100 are expected to become obsolete as newer models (B300, Rubin) become available, with pricing divergence anticipated as it takes too many old chips to inference new larger models efficiently.
INFRA— Multiple physical and capital constraints threaten AI infrastructure scaling: 100K electrician shortage with wages hitting $250K/year, limited debt capital supply ($450B raised by hyperscalers), and finite retiree assets funding the buildout.
TSMC— TSMC faces fundamental scaling constraints as it already employs 20% of Taiwan's economy directly and indirectly. Further doubling or tripling would require labor that may not exist in Taiwan.

Not investment advice.