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If I remember during a previous GPU shortage (crypto?), Nvidia (and/or TSMC?) basically knew the music would stop and didn't want to be caught with its pants do

If I remember during a previous GPU shortage (crypto?), Nvidia (and/or TSMC?) basically knew the music would stop and didn't want to be caught with its pants down after making the significant investments necessary to increase production Not to mention that without enough competition, you can just raise prices, which, uh (gestures at Nvidia GPU price trends...)

XorNot 8mo ago
Somewhat ironically the AI boom means Nvidia would've easily made their money back on that investment though and probably even more thoroughly owned the GPGPU space. But as it is it's not like they made any bad decisions either.
alexpotato 8mo ago
Similar thing happened with mask manufacturers during COVID. 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".
- skeeter2020 8mo ago
  too bad the bicycle industry didn't learn this. They acted like COVID was the new-normal, and it has resulted in many companies disappearing when they learned the hard way that demand for bikes in a pandemic is neither sutainable nor normal.
robinwhg 8mo ago
I believe the TSMC CEO said that in a recent interview. They're aware that their now biggest customer Nvidia has a less broad product portfolio than Apple and the high volumes they buy propably won't last. It's too much of a risk to plan more Fabs based on that.
- runjake 8mo ago
  They are indeed planning for more fabs, in order to meet volumes. Last week: “TSMC's board approves $45 billion spending package on new fabs” https://www.tomshardware.com/tech-industry/semiconductors/tsmcs-board-approves-usd45-billion-spending-package-on-new-fabs-record-sign-off-signals-aggressive-expansion-to-grow-capacity https://www.tomshardware.com/tech-industry/semiconductors/ts...
  - aurareturn 8mo ago
    Silicon Valley is arguing that TSMC isn't investing enough. They should be investing hundreds of billions to build fabs, like how big tech is investing in the AI buildout. $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?
    - rwmj 8mo ago
      "Silicon Valley" doesn't get to make the decision unless they are willing to send some of those hundreds of billions to TSMC up front. (TSMC isn't going to want future promises of business either since those are worth very little.)
      - aurareturn 8mo ago
        I don't disagree. I wrote the top comment here basically saying the same thing: https://news.ycombinator.com/item?id=46764223 https://news.ycombinator.com/item?id=46764223 If big tech prepays for the entire fab, I think TSMC would do it.
        toss1 8mo ago
        And if the Big Tech companies think it is so important to get all those compute and/or memory chips sooner and in larger supply, it should be no problem at all for those Big Tech companies to pay for the costs and then have priority access to all (or their portion of) the output for the future years. 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).

XorNot 8mo ago

Somewhat ironically the AI boom means Nvidia would've easily made their money back on that investment though and probably even more thoroughly owned the GPGPU space. But as it is it's not like they made any bad decisions either.

alexpotato 8mo ago

Similar thing happened with mask manufacturers during COVID. 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".

skeeter2020 8mo ago
too bad the bicycle industry didn't learn this. They acted like COVID was the new-normal, and it has resulted in many companies disappearing when they learned the hard way that demand for bikes in a pandemic is neither sutainable nor normal.

robinwhg 8mo ago

I believe the TSMC CEO said that in a recent interview. They're aware that their now biggest customer Nvidia has a less broad product portfolio than Apple and the high volumes they buy propably won't last. It's too much of a risk to plan more Fabs based on that.

runjake 8mo ago
They are indeed planning for more fabs, in order to meet volumes. Last week: “TSMC's board approves $45 billion spending package on new fabs” https://www.tomshardware.com/tech-industry/semiconductors/tsmcs-board-approves-usd45-billion-spending-package-on-new-fabs-record-sign-off-signals-aggressive-expansion-to-grow-capacity https://www.tomshardware.com/tech-industry/semiconductors/ts...
- aurareturn 8mo ago
  Silicon Valley is arguing that TSMC isn't investing enough. They should be investing hundreds of billions to build fabs, like how big tech is investing in the AI buildout. $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?
  - rwmj 8mo ago
    "Silicon Valley" doesn't get to make the decision unless they are willing to send some of those hundreds of billions to TSMC up front. (TSMC isn't going to want future promises of business either since those are worth very little.)
    - aurareturn 8mo ago
      I don't disagree. I wrote the top comment here basically saying the same thing: https://news.ycombinator.com/item?id=46764223 https://news.ycombinator.com/item?id=46764223 If big tech prepays for the entire fab, I think TSMC would do it.
      - toss1 8mo ago
        And if the Big Tech companies think it is so important to get all those compute and/or memory chips sooner and in larger supply, it should be no problem at all for those Big Tech companies to pay for the costs and then have priority access to all (or their portion of) the output for the future years. 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).