Big Tech's $133B Q1 capex binge locks in a depreciation treadmill through 2030, even as Goldman flips to long hyperscalers/short semis. China's AI chip market is going domestic fast — Huawei targeting $12B in AI chip revenue this year. April Korea DRAM exports exploded +83% QoQ to $9.25B, but commodity DRAM margins now exceed HBM, incentivizing the Memory Big 3 to deprioritize the very product AI demand needs most.
Big Tech spent $133B in Q1 capex, up 70% y/y. Combined depreciation hit $41.6B in the quarter. Server equipment depreciates over 5-6 years — today's record spend locks in earnings drag through 2030. Consensus pegs annual depreciation for MSFT, AMZN, META, and GOOGL exceeding $430B within five years, against $372B of combined net income last year. Useful life extensions from ~4 to 5-6 years are already spent as a lever.
Goldman's Covello is now recommending long hyperscalers, short semis. His thesis: compressed valuation multiples already discount capex skepticism. If hyperscalers demonstrate positive ROI, the relative trade pays off — semis would actually get hurt as capex slows.
↳ GOOGL's blowout quarter is the first supporting data point. Single-day market cap gain hit a record. Total valuation at $4.65T, now within striking distance of NVDA's $4.85T.
Huawei AI chip revenue is tracking ~$12B in 2026, up at least 60% from $7.5B in 2025. The 950PR entered mass production in March; an upgraded 950DT is planned for Q4. Beijing is pressuring Chinese tech firms to source domestically. Meanwhile, U.S. regulators require Nvidia chips sold to China be used only in-country — H200 units reportedly stuck in customs clearance.
Morgan Stanley models the China AI chip TAM at $67B by 2030, with 86% supplied by domestic vendors. This year, domestic suppliers control ~$21B. Separately, SMIC has reportedly produced early 3nm test wafers as of February 2026.
↳ Structural headwind for NVDA's China revenue. The real question is whether Huawei's domestic scale translates into exportable competitive pressure in adjacent markets over time.
April Korea DRAM exports hit $9.25B (+15% MoM, +83% QoQ). SSD exports surged to $3.84B (+20% MoM, +181% QoQ). The volume is massive.
But the mix matters. Commodity memory profitability now exceeds HBM, giving Samsung, SK Hynix, and Micron stronger incentive to prioritize commodity DRAM/NAND production. This creates a near-term HBM supply squeeze even as AI demand accelerates. David Patterson (Turing Award, RISC architect) flags High Bandwidth Flash (HBF) as the likely next bottleneck after HBM.
Epitaxial wafer ASPs are turning. Leading-edge logic wafer demand (7nm and below) modeled to reach ~1M wpm by CY28, ~10% of total 300mm equivalent demand. GlobalWafers, SUMCO, Shin-Etsu, and Siltronics stand to benefit.
↳ Apple's earnings confirm memory is a cost variable, not a supply constraint. The real bottleneck is SoC/leading-edge capacity at TSMC. If memory is available but silicon isn't, the HBM shortage persists even as commodity DRAM floods out.
Low TSMC SoIC yields are pushing the industry to lower near-term 2026 CPO shipment forecasts. A delay signal for the optical interconnect bull case. Teradyne acknowledged Advantest's competitive capabilities in CPO testing — notable, as Teradyne was expected to dominate this segment.
Former TSMC packaging VP Douglas Yu joined MediaTek. Insiders expect his arrival to de-risk MediaTek's first adoption of EMIB-T packaging. Industry source: "TSMC assumed customers would not leave, but they did." TSMC is now rushing to fill the packaging gap.
↳ TSMC's structural edge remains — fabs break even at 25% utilization, down from 35-40% — but packaging is becoming a contested front.
Monolithic Power's Q1 call signals AI demand broadening into CPU servers, optical modules, switches, storage, DDR5, and higher-voltage power conversion. AXT reports indium phosphide substrate demand accelerating faster than qualified supply, with customers shifting to multi-year allocation security. Geographic demand broadening from U.S. hyperscalers to China's AI optical ecosystem.
Aixtron sizes the optoelectronics tool TAM at €300-400M annually (80-100 G10 tools/year). Cohu pivoting from auto/industrial test toward AI thermal management and HBM inspection with its Eclipse handler.
Top cloud GPU providers are sold out on MI355x. H100s pricing at $3.39/hr, MI300x at $1.99/hr — ~70% discount suggesting AMD is buying share aggressively. Short-term contracts disappearing.
Applied Digital signed a 15-year, 300MW lease with a second IG hyperscaler at Delta Forge — ~$7.5B contracted value, total now $23B+. Over 50% of revenue backed by IG tenants. Operations mid-2027.
$TEAM +20% AH — potential software narrative inflection.
MediaTek: Goldman TP5000, 90% upside. Next-gen AI ASIC ASP multiple times higher, compute die involvement beyond I/O. TSMC packaging VP hire de-risks execution. Gross margin accretive.
$QCOM: Price action reminiscent of AI200/250 announcement. Mobile bottomed, but memory cost pressure persists. Custom ASIC read-through mentioned.
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