Big Tech Is Going Vertical (Hardware & Semiconductor Renaissance)
The phrase “Owe the bank 500 dollars, that is your problem. Owe the bank 500 million — that is the bank’s problem.” is something that comes to mind for some of the tech monopolies right now. There is a shifting relationship between the largest software companies in the world and their suppliers. As the leading software companies have become ever-larger portions of the compute pie, it’s kind of become the problem of the tech companies and not the semiconductor companies that service them to push forward the natural limits of hardware. Software ate the world so completely that now the large tech companies have to deal with the actual hardware that underlies their stack. Especially as some companies like Intel have fallen behind.
Now the largest software companies are slowly becoming hardware companies and pursuing an integrated strategy that only can be achieved at the largest scale possible and with barriers of entry that are quickly expanding in addition to their well-known network effects. The walls are slowly rising, the moats slowly widening, and as we are on the cusp of a new hardware renaissance, the decisions the hyperscalers make now are going to have a long-lasting competitive shadow. More on this in time to come.