Weekly Briefing

NVIDIA commands approximately 80-90% of the AI accelerator market by revenue as of 2025, generating over $100 billion annually from data center GPUs. While percentage share will decline to 75% by 2026 as AMD and custom silicon scale, NVIDIA's absolute revenue continues to grow because the total addressable market is expanding faster than any single competitor can capture.

The semiconductor industry is experiencing the broadest simultaneous price increase cycle in over a decade. From TSMC's ~50% 2nm wafer price premium to Analog Devices' 10-30% hikes to OSAT packaging surcharges of 8-20%, the entire chip value chain is repricing upward. This is not a temporary supply blip — it reflects a structural shift where AI-driven capacity competition, rising energy and materials costs, and geopolitical supply chain restructuring have ended the era of predictable cost deflation. Chip designers, OEMs, and procurement teams must fundamentally rethink cost models and sourcing strategies.

The Nvidia-DeepSeek incident reveals that algorithmic efficiency can be a powerful countermeasure to hardware-based export controls, shifting the geopolitical battlefield from silicon access to intellectual property and optimization expertise. This necessitates a fundamental rethink of technology containment strategies, as China demonstrates the ability to achieve state-of-the-art AI performance even with restricted or less powerful hardware, posing a direct challenge to U.S. technological supremacy.

Microsoft's custom silicon strategy with Maia 200 is less about competing with NVIDIA on peak performance and more about achieving a dramatically lower Total Cost of Ownership (TCO) for its high-volume, internal AI inference workloads. While this reduces direct GPU purchases, it intensifies the battle for TSMC's limited 3nm and advanced packaging capacity, potentially creating new, more complex supply chain bottlenecks for the entire industry.

The AI boom is creating a 'gravity well' for semiconductor manufacturing capacity, pulling resources away from consumer markets and towards high-margin data center components. This strategic reallocation by major memory makers like Samsung, SK Hynix, and Micron is not a temporary blip but a structural market shift, leading to a projected price surge of over 40% for client SSDs in Q1 2026. Enterprises and PC OEMs must immediately reassess procurement strategies to mitigate significant cost increases and potential shortages.