alt Hacker NewsAnd if they invest in new fabs and the bubble doesn't pop then they make a whole lot of that money they're in business to make.
The incentives here are naturally very well aligned with solving the shortage. If doing nothing is likely to solve the shortage, then they'll do nothing. If increasing supply is likely to solve the shortage, then they'll increase supply. If there's a 50/50 chance of both, then some will increase supply and some will do nothing, and the market will reward whichever group was right and punish the other.
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You forgot to say “Amen” at the end of your gospel.
I'm always baffled how seriously some people take that “market and incentives always lead to the greater good” religion despite plenty of empirical evidence against it.
But hey, there are creationists out there too so it's not too surprising I guess.
Building a new factory would cost $20 billion and take 3 to 4 years [0,1]. With chip output capacity and AI boom profit margins, it would take just under a decade to break even. If the bubble bursts and chips return to pre-boom levels, then it would take over 30 years to break even.
Ford had almost $20 billion in EV car manufacturing investments planned for the mid-late 2020s and the abrupt end of the EV subsidies cost Ford billions of dollars and they have abandoned multiple investments.
If you do nothing, you still are rewarded because you are making pure profit in either scenario. If you invest billions then you are digging out of that for years regardless, and could be in the whole for decades if you bet wrong.
[0] https://www.construction-physics.com/p/how-to-build-a-20-bil...
[1] https://techovedas.com/what-does-it-take-to-build-a-semicond...