Baker notes Taiwan Semi will spend more on CapEx in two years than in the preceding five years.
“Taiwan Semi, their 2022 CapEx is going to be many multiples of 2019. 2021 and 2022, they'll spend more than they did in the preceding five years. So there is a massive supply response coming.”
Baker says Taiwan Semi will spend more on CapEx in 2021-2022 than in the preceding five years.
“Taiwan Semi, their 2022 CapEx is going to be many multiples of 2019. 2021 and 2022, they'll spend more than they did in the preceding five years.”
Baker identifies Taiwan Semi's capacity decisions as the single most important indicator of AI bubble risk.
“The pace at which they expand capacity. If I were to watch one thing to understand where there's a bubble, it's Taiwan Semi's capacity decisions.”
Baker argues Taiwan Semi's capacity constraint prevents AI bubble; NVIDIA could sell $2-3T GPUs otherwise.
“If Taiwan Semi did what Jensen wanted, I think Nvidia could sell $2,000,000,000,000 of GPUs in '26 or '27, maybe 2,500,000,000,000, maybe 3,000,000,000,000.”
Baker argues Taiwan Semi's capacity discipline is single-handedly preventing an AI bubble.
“So Taiwan Semi, if we don't get a bubble, we need to throw a party for them because they will have single handedly prevented a bubble.”