AI bottlenecks are multiplying

Just this week, a key Nvidia server maker warned about a supply squeeze in a growing number of vital components — not just memory chips. Wiwynn Corp. Chair Emily Hong said that such constraints may not ease until late 2027, as she expects demand for data center hardware to remain red-hot over the next three to five years.

Customers are asking if she has the parts and capacity needed before they place orders, she said. Those constraints haven’t yet translated into any disruption to output, though it’s coming at a cost, she added.

“Pricing for everything is rising at the same time,” Hong told Bloomberg News. “GPU is expensive and memory is very expensive. We now need extra funding to manage.”

Runaway demand for Nvidia’s graphics processing units, which the company expects to bring in $500 billion annually, and memory chips mark the most prominent examples. In memory, revenues are expected to more than double this year, to $595 billion, as the hyperscalers show a willingness to pay a premium to secure supply, according to IDC research.

Reflecting the surge in pricing from those constraints, memory chipmakers Micron Technology Inc. and SK Hynix Inc. this week joined Samsung Electronics Co. in the $1 trillion market value club. At the same time, that remarkable growth in profits has spurred discontent amongst workers who feel they aren’t getting a big enough share of that windfall.

It remains to be seen where the worst crunches may occur — and whether they will significantly snarl a long and complex supply chain. Beyond memory, industry executives have talked about deficits of CPUs — because of the proliferation of AI inference and agentic platforms — and networking chips used in data transmission.

Optical interconnects have become the hot new thing on expectations that Nvidia’s flagship Vera Rubin platform will increase demand for faster communication between processing nodes. That’s driving a rally in a range of stocks not previously linked to the AI infrastructure boom, including Nokia Oyj.

“We’re going to see AI infrastructure and physical AI dominate the show,” said Anshel Sag, principal analyst at Moor Insights & Strategy. “This is a combination of diversification and a desire to capture some of the fast-growing AI market.”

China’s influence

Few executives are likely to play the topic up prominently — at least in public — but one of the biggest undercurrents of proceedings in Taipei will be what’s happening with its giant neighbor across the Strait.

China’s future role in the tech industry is one of the biggest uncertainties. Beijing’s ambitions in AI and chipmaking are alarming Washington at a time of rising geopolitical tensions, and are particularly concerning to a hardware sector based on an island under threat of attack.

This week, Huawei Technologies Co. made waves when it sketched out a path to close the gap with Taiwan Semiconductor Manufacturing Co. — even with Washington denying Chinese access to the most advanced chipmaking machines.

Executives may field questions about Huawei’s potential as a rival to both TSMC and Nvidia — and its implications for Beijing’s campaign for tech self-reliance.

How PC makers survive

Most of the spotlight is trained on AI, which has supercharged the share prices of companies like Dell Technologies Inc. as they expand their infrastructure business. Beijing-based Lenovo Group Ltd.’s stock doubled in May, marking its best month since 1999, due to rising AI optimism. But the traditional PC market is getting some attention too with Apple’s surprise entry into the budget laptop category. The $599 MacBook Neo has proven a success and raised expectations.

The Cupertino, California-based company has piled on pressure at the exact moment when profit margins for affordable devices are at their thinnest. Data from inSpectrum show the spot price of certain memory products is up more than 600% over the past year, leaving only large-scale operators like Apple and Lenovo able to control costs without having to raise the price on everything.

“The MacBook Neo is a big thorn in the side of the PC industry,” said IDC research director Bryan Ma. “I expect to see the PC ecosystem’s response to that during the show.”

–With assistance from Debby Wu.

(Updates with Lenovo shares in final section.)

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