Who's Profiting From AI?

Why It Matters

This shifts where value is captured in the AI ecosystem: capital-intensive chipmakers and foundries, not AI software firms, are reaping outsized profits, underscoring strategic importance of semiconductor manufacturing capacity and supply-chain geopolitics.

Summary

AI’s biggest profits are flowing to chip designers and, crucially, the manufacturers down the supply chain rather than to AI software firms. Nvidia has been the standout beneficiary, with profits surging from roughly $7 billion to over $70 billion as demand for its AI GPUs exploded. But Nvidia outsources fabrication, sending the lion’s share of manufacturing profits to Asian foundries—notably Samsung’s semiconductor unit and Taiwan Semiconductor Manufacturing Company (TSMC). TSMC, which supplies Nvidia, Apple, Tesla and AMD, posts roughly 40% net margins on advanced chips, making classic manufacturing a primary beneficiary of the AI boom.

Original Description

Financial reporting specialist Adam Deller looks at the relationships and finances of the main players in the tech race.