The economics of AI has been a big question mark in many investors' minds - What does the value chain look like? How do you model out the ROIC of AI? What would the ROIC look like?

We built up an end-to-end economics stack to answer this question - how we go from a chip’s silicon cost, through full system integration, all the way down to the dollar cost per million inference tokens.(1/4)🧵 At the top of the stack, our accelerator analysis starts with the semiconductor bill of materials (transistors, packaging, HBM, and yield assumptions) to determine GPU provider content. From there, our BoM and ODM modeling breaks down every component inside the server. The network topology model then maps how these servers interconnect.(2/4)

Qualcomm and MediaTek are in a race to reduce their dependency on the mature smartphone market. Both are still managing to beat unit growth in smartphones. But that won't last long. Investors are looking for their progress in non-smartphones. Qualcomm's non-smartphone chip business hit a $10B+ annual run-rate, contrasting with MediaTek's $8B+. (1/7) 🧵 Both have increased their investments to capture more revenue in consumer, networking, industrial and computing markets. Non-smartphones account for 30% of Qualcomm's semiconductor revenue and 48% of MediaTek's. Qualcomm has a target of $22B non-smartphone chip revenue by FY29 at a 5-year CAGR of 21%. Qualcomm built a strong moat in autos but made mixed progress in IoT (a collection of end markets including PC, consumer, networking and infrastructure). (2/7)

AI workloads are characterized by elephant flows when all of the GPUs in a cluster exchange data through collective communication operations to synchronize data for distributed workloads. These flows can often lead to congestion and load balancing issues. (1/6)🧵 To solve this problem, Meta turned to the use of Disaggregated Scheduled Fabrics (DSFs). Being “Scheduled” means that a credit-based system is used to control flows and prevent congestion – before a node can send packets across the network, it must first send a credit request towards the receiving node to make sure that the receiving end has enough buffer to receive the packet. These packets also travel over a fabric that cellifies the packets, breaking it into smaller cells and spreading it across multiple routes in the fabric. (2/6)

CMP (Chemical-Mechanical Polishing) is a type of planarization process that uses a slurry to thin or polish the wafer surface to achieve a smooth, mirror-like finish. As early as 1980, CMP was developed by IBM specifically as a technique for dielectric planarization.
Aside from wafer edge grinding, etching, dielectric deposition, metal deposition and other thin films, CMP is used commonly throughout the process.

There are several applications of CMP including copper interconnects, removal of USG (undoped silicate glass) films formed during the STI (shallow trench isolation) and polysilicon removal on DRAM surfaces. (1/8)🧵 Interestingly, the use of this technique for wafer surface planarization was initially unexpected. The reason is straightforward, in traditional semiconductor processing, direct contact with the wafer surface is strictly prohibited, as it can cause defects and particle contamination. In turn, it leads to reduced manufacturing efficiency and lower yield. However, it has now been proven that this technique not only enables surface planarization but also reduces defect density and improves yield. (2/8)

Etching is a process used to remove material from the wafer surface to meet the design requirements of an integrated circuit (IC).
There are two types of etching: one is patterning etching, which removes material in specified areas, such as transferring patterns from a photoresist or hard mask layer onto the substrate film. Another type is blanket etching, which removes the entire surface film to meet process requirements, for example, backside wafer etching. (1/11) 🧵 Etching also can be categorized into two types based on characteristics: wet etching and dry etching. Wet etching is typically performed at room temperature, requiring no additional vacuum equipment, RF systems, or gas delivery setup. The process is relatively easy to control, making the equipment significantly cheaper than that used for dry etching. Below, we will introduce each in detail. (2/11)

AWS believes that their custom K2v5/6 NIC with their in house EFA protocol has better perf than NVIDIA ConnectX-7/8 NICs but due to how increasingly how tightly integrated NVIDIA racks are, it becomes increasingly difficult for hyperscalers to use their own NICs. This is what led to AWS GB300 NVL72 to disaggregate  their NICs from the compute tray into an NIC only sidecar called "JBOK". Below we breakdown the decisions and constraints that led to this design. 👇1\N 🧵 For GB200, AWS only supported GB200 NVL36x2 and NVL36 which allowed up to 72 GPUs per NVLink domain while allowing each rack to be 66kW power & 2U compute trays by connecting 2 NVL36 with NVLink ACC cables. As many GCP & AWS customers have noticed, NVIDIA's driver & physical engineering support for NVL36x2 has been lackluster and way more bugs than their standalone NVL72 design. Although AWS markets their NVL36x2 as "NVL72", it is not topologically equivalent to an actual NVL72. 2/N🧵

China’s State Council on October 9 approved Order No. 61 of 2025, announcing export controls on certain overseas rare-earth items. This marks the fourth round of rare-earth export restriction efforts; the previous round was on April 8.
(1/8)🧵 China’s new rare earth export controls focus on two key points:
⚆ Products containing Samarium (Sm), Dysprosium (Dy), or Gadolinium (Gd) originating from China that account for 0.1% or more of the item’s value must obtain a dual-use export license.
⚆ Rare earth materials are not permitted for military use.
⚆ Exports related to the R&D or production of sub-14 nm logic chips, 256-layer-plus memory chips, semiconductor equipment, or AI with potential military use, which will now require case-by-case approval.
(2/8)

Looking closer at the Intel – NVIDIA partnership shows no vote of confidence in Intel Foundry! The deal primarily drives demand in Intel Products, with minimal NVIDIA IP fabbed on Intel nodes. While the deal is negative for ARM in datacenter and AMD in PC, Intel Foundry does not gain external revenue either. (1/9) 🧵 On datacenter chips: Intel will sell x86 CPUs to NVIDIA. NVIDIA will integrate them into superchips (such as the Grace Blackwell superchip board shown) and sold in rackscale NVL72 systems. Superchip means this is an alternative to Grace/Vera for enterprise customers who have to rely on x86. (2/9)

At COMPUTEX this May, NVIDIA announced plans to establish its Constellation headquarters in Taiwan. However, the project now faces uncertainty. (1/7)🧵 The proposed site for the Taiwan HQ was the T17 and T18 plots in the Beitou-Shilin Technology Park. NVIDIA had signed a Memorandum of Understanding (MOU) with Shin Kong Life Insurance, a Taiwanese company with total assets exceeding USD 100 billion, but the MOU expired on September 30 and is no longer valid. (2/7)

Physical vapor deposition (PVD) is a deposition process that uses heat or sputtering to vaporizes solid materials through heating or sputtering, and the resulting vapor condenses on the substrate surface to form a solid thin film. PVD plays a critical role in semiconductor metallization processes.
PVD films generally provide higher deposition quality, lower impurity concentration, and lower resistivity, while CVD films typically offer better step coverage.
The cost of PVD is generally lower than CVD, because PVD operates under milder process conditions (around 200–500 °C) and requires relatively simple equipment. In contrast, CVD requires high-temperature environments and more complex reaction control, resulting in higher equipment and process costs.
(1/5) 🧵 The PVD process typically uses two methods: evaporation and sputtering, with sputtering being the primary technique. This is because sputtering can deposit metal films with high purity and low resistivity, while also providing good uniformity and reliability.
Evaporation
In the early days of IC manufacturing, when aluminum was the only metal used for metallization, thermal evaporation was widely adopted for depositing aluminum films. However, since this process could affect transistors and circuits, it was later replaced by the more familiar electron-beam evaporation.
As shown in the figure, the process must be carried out in a vacuum environment of about 10^-6 Torr to reduce water and oxygen content, thereby preventing the formation of high-resistivity aluminum oxide from reactions with aluminum. A tungsten filament is heated by passing current through it, melting the aluminum and eventually vaporizing it. When the aluminum vapor reaches the wafer surface at the top, it condenses to form an aluminum thin film.
However, filament heating can contaminate the deposited aluminum film with sodium. Even trace amounts of sodium are enough to shift transistor threshold voltages and compromise reliability. As a result, this method is now rarely used outside of academic research institutions.
(2/5)

Chemical vapor deposition (CVD) is a process that uses gaseous chemical precursors to undergo chemical reactions on the wafer surface, depositing a solid material as a thin film layer. It is widely utilized across the semiconductor and materials industries for depositing a diverse range of functional films, including:
⚆ Polycrystalline and Epitaxial Silicon Deposition
⚆ Dielectric Deposition: forming various insulating layers, such as oxides, oxynitrides, and low-k dielectrics.
⚆ Conductor Deposition: key metallic and conductive films, including W (Tungsten), Ti (Titanium), and Cu (Copper).
(1/6) 🧵 These steps are crucial for controlling the film's properties and uniformity.
⚆ Reactant Delivery: Gaseous precursors are introduced into the reaction chamber, typically mixed with an inert carrier gas (like Ar or N), to ensure uniform flow dynamics and deposition.
⚆ Diffusion to the Substrate: The reactants diffuse through the boundary layer and approach the substrate surface.
⚆ Surface Adsorption: The gaseous precursors are then adsorbed (physically or chemically bonded) onto the heated surface of the substrate.
⚆ Surface Migration: The adsorbed raw materials migrate (move around) on the substrate surface.
(2/6)

Umami, the "fifth taste," is the deep, savory flavor that gives broths, aged cheeses, and slow-cooked meats their mouth-coating depth. Whether you’re a Michelin-starred chef or a hobbyist home cook, maximizing the umami of your dishes is key to cooking delicious food. Umami is not just important in the kitchen – but is also the base of today’s high performance processors such as GPU servers. Click below to learn more about the seemingly unlikely relationship between the fifth taste and high performance chips.🧵 We are of course talking about Ajinomoto Build up Film (‘ABF’). This is the dielectric insulator film that goes into the organic package substrate of most modern processors today. How did it come from Japanese seasonings heavyweight Ajinomoto?

Umami was first discovered in 1908 by Kikunae Ikeda while studying kombu broth, umami’s secret lies in glutamic acid. This the very compound that Japanese seasoning company Ajinomoto would later crystallize as MSG (monosodium glutamate).

It's nice to see that OpenAI has updated their chart crime to accurately reflect the size of the 69% SWE-bench Verified score in their bar chart, and the achievement of GPT-5 at 74.9%

However, there is more to the story. OpenAI isn't running all 500 tests in SWE-bench Verified. 🧵
What is 74.9% of 500? 374.5 of 500 correct? If we look at the subscript, OpenAI clearly says that they have only run 477 of the total 500 tests in the SWE-bench Verified dataset. Why?

TSMC 2nm process data leak investigation🧵

Taipei time August 5th, a trade secret leak case involving TSMC's 2nm technology was uncovered. 9 engineers were suspected of leaking confidential information, and 3 of them were detained by the Intellectual Property and Commercial Court. The engineers are believed to have stolen yield data and process secrets by taking nearly 1,000 photos with their phones at a Starbucks while working from home, which led to them being caught red-handed. Following the incident, TSMC fired the employees and implemented its most severe "five-level guilt-by-association" penalty, which could even impact high-level executives at the vice president level.

The Information came out with some reporting on GPT-5 this morning.
Let's talk about it and discuss the technical details of the model. thread by analyst @aj_kourabi

https://twitter.com/theinformation/status/1951399547969601786

We think that GPT-5 is a hybrid model, able to switch between thinking and non-thinking modes. TI reports that the model is able to produce high quality answers without a lot of tokens.
This will make it similar to Claude 4 in both regards. Being very token efficient for a given answer means API users are charged less, as the price increases with tokens generated.

ASML: why an engineering company will need to become an “economics” company 🧵 For most of its history, ASML won by solving exceptional technical challenges. They threw 10,000 engineers at a problem until it was solved. Even if it took a decade

The new paradigm, Reinforcement Learning, is an inference heavy game.

And China wants more chips to play.

This has included export control violations, HBM smuggling, national investment on a scale larger than the Manhattan project, and activating the full might of Huawei: 🧵

1/7 Export controls have been effective at limiting the Chinese ecosystem's access to compute. China was expecting more than a million H20 chips, which has better inference performance than an H100. This would have enabled larger-scale model serving and faster RL progress.

2/7

Three years after the CHIPS Act pledged $52B to reboot U.S. chips, Clay, NY still looks like this—just a “Coming Soon” sign in an empty field.

Micron, Amkor, and SK Hynix are mired in NIMBY fights and two-year permits while Asia pours concrete in weeks.

1/7 Time is money, delays cost ≈ $5M per day on a $20B fab. Red tape, not lithography, is the new yield limiter. Meanwhile politicians pat themselves on the back for cardboard models.

2/7

What’s the profitable component in the Nvidia AI server supply chain?

If your answer is the “GPU”, then you are dead wrong. In fact, the most profitable component within Nvidia’s server is the rail kit made by “Kingslide”!

This is how hyperscaler procurement people describe it: “Kingslide is King”

1/4 So, what are rail kits and why are they so important to AI servers.

Server rail kits are not like the rail kit you find in your IKEA furniture. These were introduced to servers to enable much an easier maintenance procedure. Each hyperscaler has their own dimensions and requirements for the rail kit as well as a long qualification cycle for new vendors.

For each AI server, the rail kit becomes even more important as each H100 node is north of 80kg (200 lbs), significantly heavier than a CPU server.

Hence, the ASP of the AI rail kit is 10 times higher than that of a CPU server, which brings us to our next point.

2/4

TSMC has committed to invest $165b in the US. While this is margin dilutive, we see a path for TSMC to achieve 65% Gross Margins by 2030. This would continue a trend of higher margins over the past two decades.

There are three core drivers of future gross margin expansion:

- Leading-edge pricing power and higher utilization
- Advanced Packaging margin improvement
- Removal of temporary gross margin headwinds

1/5 We estimate TSMC is currently running its Taiwan wafer fabs at +60% Gross Margin. TSMC should be able to leverage its quasi-monopoly status at the leading-edge to drive ASP increases 3% above cost increases.

Pricing power and higher utilization should drive Taiwan wafer fabs to the high-60% range.

2/5

BREAKING NEWS: The upcoming MI450X IF128 could potentially break the CUDA MOAT and might even be better than NVIDIA's VR200 NVL144!

This will be AMD's first-ever rack scale architecture!

We explain the architecture details below🧵👇

1/7 In H2 2026, @AMD will release the MI450X IF128 which will be their first ever rack scale architecture.

It uses Infinity fabric protocol over ethernet for the scaleup domain to connect 128 GPU packages with over 1.8TByte/s unidi bandwidth per GPU.

2/7