You guys think it will be together with the “AI” bubble or that it will independently pop sooner? Because all of the prices currently are inflated deliberately using artificial scarcity and preying on FOMO.
My fear is that when the AI bubble pops it will take many PC hardware manufacturers with it. Can Nvidia survive if OpenAI goes under? It will leave a massive hole in their finances.
A bubble popping might just make matters even worse.
As they say, “The market can stay irrational longer than you can stay solvent”, especially if AI Bro financial circlejerk BS is the only thing staving off a recession / depression in the US, and the fraudster in chief is getting his cut.
If they hold on long enough, they’ll have gone a long way towards making the population rent compute (after AI is found wanting, they’re gonna want to do something with all that compute) and you know how much the technofuedalists love rent.
This one isn’t artificial scarcity, I’m afraid
There is literally less available for the consumer because all the various chip fabs have had their capacity bought for AI data centre expansion.
This is not the same as a scalper situation where the supply has been taken but ultimately needs to be sold back to consumers. You, a single consumer, are competing with the buying power of the likes of Google, Amazon & Microsoft.
Plus they have booked up this capacity pretty far in advance, so even if they stopped buying up more today (they will not until the AI bubble pops), consumer prices aren’t going to change until all of that capacity reservation has passed. Then after that, all the companies that wanted to buy capacity, but couldn’t compete with the big ones will get their turn. Then eventually the fabs might find themselves with a bit of surplus capacity to increase the production of consumer hardware. Then there will be the pent-up consumer demand keeping prices elevated for a good number of months or years (depending how long this all goes on for). After all that, supply and demand could see prices dropping back down a bit.
These fabs will start to physically expand on order to increase capacity if it goes on long enough, but these kind of expansions take many years to build and bring online.
Other things to remember, the current US administration is motivated to prop up this bubble as long as they can because it’s basically the only industry in the US that’s not shitting the bed currently, so when it pops a lot of US GDP is going with it and probably going to cause a pretty bad recession. Another is inflation; by the time this is all over prices might have inflated enough due to the devaluation of money that any drop in prices would be offset.
Basically, I wouldn’t hold your breath
You can hold your breath for AI bubble popping, even if one of the large AI companies runs out of investor confidence of returns in stock prices and their stock price plummets, they won’t be able to pay for all the future reserved capacities. Since they have been paying with shares and not cash. There will come a time when they can’t afford to dilute shares to pay for hardware.
What happens then? Hardware manufacturers will still want to offload the inventory, if corpo clients can’t buy it, they’ll sell it in retail for whatever they can.
So I guess if AI survives and we find enough end consumers to pay for it, hardware is not becoming cheaper for half a decade, but if it doesn’t find consumers and crashes, we’ll get some sweet cheap hardware just in 3-4 months after the first collapse.
Don’t get me wrong it’ll have to pop eventually, but I see it as very likely the US government will pump billions of taxpayer money into the industry to keep it going long after it should have failed. The US is basically guaranteed to go into a pretty bad recession when it pops now given basically all US GDP growth is from AI currently.
Cancelling capacity is a good point that I missed, though there’ll still be the wave of non-AI but non-consumer demand that’s been pent-up, so it’s still not going straight back to the consumer.
The inventory thing isn’t going to play out like that simply because the stuff being made is incompatible with consumer hardware. People running data centres might be able to do some cheaper server upgrades, but you’re not going to be putting HBM memory and SXM5 GPUs into any consumer motherboard
3-4 months isn’t happening even if there’s a catastrophic, all-pops-at-once, event tomorrow. And honestly, given everything, I think the best we’re seeing is a negligible drop at least a couple of years away, and that’ll become the new norm.
Oh another one I forgot, Bezos’ post-AI-bubble plan seems to be that consumers only get thin clients and rent compute from the cloud. I’d put money on AWS buying up the majority of spoils of unsold AI inventory, and fab capacity shifting to serve that. It’s now very much in Bezos’ interest to make sure consumer hardware prices never come down, so people are left with no other choice.
It’s not really artificial scarcity, there is actually less consumer hardware available at the moment.
The underlying issue is that companies are selling ML hardware that doesn’t exist to data centres that do not exist, which have demand that does not exist. I call it artificial scarcity because there is no beneficiary at the end of this chain. It’s money that basically goes around in a circle between oligarchs, they play hot potato as if it were NFTs. And of course, Nvidia, AMD and Intel are very happy to sell to lunatics who think their data center is a goldmine, as Jensen puts it frequently. In a Gold Rush, only shovel salesmen make money.
When folks start taking fascists accountable.
As long as FOMO gets enough whales to buy the top of the line, nothing will change. Why cater to the majority, when the minority is willing to spend that much more money?
When the billionaires fully saturate all their AI server farms and we reach some sorta equilibrium I guess.
Some companies may not return to caring about gaming or personal electronics however.
That"s my guess, I don’t really know. Meantime I’ll buy used during the bubble.
The latter is likely to be true for many imo, meaning it will never really “pop”.
I don’t think we’ll see affordable PC HW again, except for really lower end hardware which wouldn’t have any business use otherwise.
I hope I’m wrong, but it feels like the end of the consumer market.Yeah it could be the new normal like that. Or Americans eat the rich at some point and the house of cards collapses. Or China hardware takes off and caters to consumers. Nothing is certain just yet.
