$1.3 trillion sell-off in chipmaker stocks: the real threat is not silicon, but transformers and power plants
The stock market of leading chip manufacturers has lost over $1.3 trillion in market capitalization over the past month. However, as deep data shows, the true cause of this crash is not a decline in demand for semiconductors, but systemic infrastructure failures extending far beyond silicon factories.
Amid the sell-off, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) published a record quarterly report. The company's revenue reached $40.2 billion, growth forecasts exceeded 40%, and confidence in the artificial intelligence (AI) megatrend was described as "very high." TSMC's profit rose by 77%, hitting an all-time high, and margins surpassed all previous figures. The company also announced an additional $100 billion investment in its Arizona plants.
Why does the stock decline not reflect reality?
The paradox is that chips themselves are no longer a scarce resource. Demand for them is accelerating, not fading. However, the industry's development is constrained by three bottlenecks: steel, copper, and time. The first bottleneck is chip packaging. Capacity for CoWoS technology, which connects the processor to memory, is already insufficient: Nvidia has purchased about 60% of available capacity, and demand for this type of packaging has tripled in two years. TSMC is nearly doubling production, but lines are still running at full capacity.
The second and much more serious problem is energy. A finished chip is useless without electricity, and the industry is acutely short of it. Data center statistics confirm the energy shortage. Companies have announced 16 gigawatts of capacity in the US for 2026, but are building only 5 of them: the remaining projects are frozen, and 25% do not even have an energy supply plan.
Main bottleneck: transformers and turbines
The root of the problem lies in equipment that the market hardly remembers. This refers to high-voltage transformers that convert grid energy into data center power. Currently, their manufacturing takes an average of 48–60 months, whereas before 2020, just 12 months sufficed. The shortage will persist for a long time: Hitachi, Siemens Energy, GE Vernova, and ABB—the four manufacturers of such units—have accepted orders years in advance. At Siemens Energy alone, the order backlog has reached nearly €136 billion.
The problem begins at the raw material level. Only five companies in the world produce the special electrical steel for transformers, and they cannot quickly ramp up production. Data center operators are trying to bypass the shortage by ordering gas turbines for their own power plants, but GE Vernova, Siemens, and Mitsubishi have already sold their capacity approximately five years or more in advance.
The final picture: chips are produced without delays, packaging capacity is fully booked, new transformers will appear in 2029, and turbines in 2030. The largest construction project in economic history is being held back by heavy electrical equipment that is almost handmade.
Expert commentary from Cryptalist: The market was wrong to sell off chipmaker stocks out of fear of falling demand. The reality is that we are on the verge of a structural supply shortage caused not by silicon, but by "iron" and concrete. The winners will not be chip manufacturers, but transformer and turbine producers, as well as owners of sites with ready grid connections. The story of AI is now not about intelligence, but about electricity. What should be counted are not chips, but substations.