TSMC is accelerating its Arizona factory build-out because CFO Wendell Huang told CNBC there's robust customer demand for AI chips. Robust customer demand. That's the phrase executives deploy when they need to justify spending billions of dollars on dirt in a desert.
Huang called it an AI megatrend. Not a trend. A megatrend. The mega prefix does important work here. It signals that this time the hype cycle will never end and everyone who buys the top will retire wealthy. Previous megatrends include fiber optics in 1999, housing in 2006, and whatever the f*ck people thought was happening with SPACs in 2021.
Arizona gets the factory because apparently Taiwan being 90 miles from a hostile superpower finally registered as a supply chain risk. Took long enough. The solution is moving chip production to a state that will run out of water by 2040, but at least the missiles won't be Chinese.
The fresh investment comes on the back of robust customer demand. Huang already said that but CNBC needed to pad the word count so they said it again. Robust customer demand means Nvidia ordered chips. One customer. That's robust now.
Retail traders saw the headline and immediately bought Taiwan Semiconductor calls expiring Friday. They did not read past the word AI. They do not know what a foundry is. They think TSMC manufactures the ChatGPT. They will lose money and blame Jerome Powell.
The factory will take years to build and even longer to reach full production capacity. By then the AI megatrend will have moved on to quantum blockchain metaverse tokens or whatever grift replaces it. But Huang will still have his CFO title and Arizona will still have a giant expensive building that makes chips nobody wants anymore at prices nobody will pay.
TSMC stock moved 2% on the news because algorithms parsed the word AI and executed buy orders faster than you can say overvalued.
Photo by on Unsplash
Leave a Comment