From memory shortages to rising GPU prices, 2025 seemed like a year of significant scarcity in the supply chain for all things semiconductors. But what does the future hold for this super-tight market in the years to come?
One school of thought suggests that in a couple of years, the story goes, today’s hyperscaler accelerators will spill out into the secondary market in a crypto-style deluge. Cheap ex-A100s and B200s – which could be considered AI factory cast-offs –will suddenly become available for everyone else looking to buy.
Data center hardware is often assumed to have a finite and sometimes short lifecycle, with depreciation schedules and refresh cycles that push older hardware into uselessness after a few years. But another group suggests AI compute doesn’t behave like a consumer GPU market, and the ‘three years and it’s done’ assumption is shakier than many people want to admit. As Stacy Rasgon, managing director and senior analyst at Bernstein, said in an interview with Tom’s Hardware Premium, the idea that “they disintegrate after three years, and they're no good, is bullshit.”
(Image credit: Nvidia)
Some believe the present tightness in the market isn’t just a temporary crunch but is more a structural condition of the new post-AI norm in the market, with a closed loop where state-of-the-art hardware circulates between a handful of cloud and AI giants.
So what’s the reality? Ben Bajarin, an analyst at Creative Strategies, describes the current moment as a “gigacycle” rather than another chip boom. In his modelling, global semiconductor revenues climb from roughly $650 billion in 2024 to more than $1 trillion by the end of the decade. “There’s some catch-up necessary, but there’s also the fact that the semiconductor industry remains relatively conservative, because they are typically cyclical,” Bajarin said in an interview with Tom’s Hardware Premium. “So everybody’s very concerned about overcapacity.”
That conservatism matters because chipmaking capacity takes time, effort, and a lot of money to stand up and bring online. It’s for that reason that we’re likely to see tightness in the market remaining for a little while yet: demand is spiking, yes, but companies aren’t that keen to stand up their supply until they can absolutely guarantee a return. “They don’t want to be stuck with foundry capacity or supply capacity that they can’t use seven or eight years from now,” Bajarin said.
Looking at the numbers
According to Bajarin’s analysis, AI chips represented less than 0.2% of wafer starts in 2024, yet already generated roughly 20% of semiconductor revenue – a huge concentration on a single space, which helps explain why the shortages feel different from the pandemic-era GPU crunch. In 2020 and 2021, consumer demand surged, and supply chains seized up, but the underlying products were still relatively mass market in manufacturing terms. But today’s AI accelerators require leading-edge logic, exotic memory stacks, and advanced packaging.
It’s possible to make more of them, but not quickly, and not without knock-on effects. “If you look at the forecasts for wafer capacity or substrate capacity, nobody's scaling up,” cautions Bajarin.
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