Big Tech Q1 capex hit $133B (+70% YoY), locking in $430B+ annual depreciation within five years against $372B in combined net income. Memory supply is tightening fast — Korean DRAM exports surged 83% QoQ to $9.25B. Huawei's AI chip revenue is sprinting to $12B as NVIDIA's H200 gets blocked at Chinese customs.
Big Tech deployed $133B in Q1 capex, up 70% YoY. Combined depreciation hit $41.6B in the quarter. Server equipment depreciates over 5-6 years — today's record spend locks in elevated depreciation 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 lives already extended from ~4 to 5-6 years. That lever is spent.
↳ Alphabet's Q1 blowout (cloud + AI demand) pushed market cap to $4.65T, now within striking distance of NVIDIA's $4.85T. The market is starting to reward hyperscalers who demonstrate ROI — not just those writing the checks.
Korean preliminary April semiconductor exports: DRAM $9.25B (+15% MoM, +83% QoQ), SSD $3.84B (+20% MoM, +181% QoQ). Epitaxial wafer supply-demand is tightening faster than expected. Leading-edge logic (7nm and below) wafer demand inflecting next year, estimated to hit ~1M wpm in CY28 (~10% of total 300mm equivalent). GlobalWafers, SUMCO, Shin-Etsu, Siltronics are the beneficiaries.
↳ Apple confirms memory is not a supply bottleneck — it's a cost variable pressuring margins. The real constraint is SoC/leading-edge node capacity at TSMC.
Huawei AI chip revenue projected at ~$12B in 2026, up from $7.5B in 2025 — a 60%+ jump driven by the 950PR (entered mass production March) with a 950DT upgrade planned for Q4. Beijing is directing Chinese tech firms to use domestic chips and restrict NVIDIA silicon to domestic-only operations. NVIDIA H200 units reportedly cannot clear Chinese customs. Morgan Stanley sees China AI chip market at $67B by 2030, with 86% served by domestic suppliers.
↳ SMIC has reportedly produced early 3nm test wafers as of February 2026. If yields improve, the domestic substitution timeline accelerates further.
Low TSMC SoIC yields are forcing the industry to cut near-term 2026 CPO shipment forecasts. Meanwhile, former TSMC packaging VP Douglas Yu has joined MediaTek, which should de-risk MediaTek's first adoption of EMIB-T packaging. Reports cite an industry source: "TSMC assumed customers would not leave, but they did." TSMC is now rushing to close the packaging gap between CoWoS and competing approaches.
↳ David Patterson (Turing Award, RISC architect) identifies High Bandwidth Flash (HBF) as the likely next bottleneck after HBM — demand surge incoming.
Monolithic Power Systems 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 contracts — and China's AI optical ecosystem scaling rapidly. Aixtron sizes the optoelectronics opportunity at 80-100 G10 tools/year (~€300-400M TAM).
↳ Applied Digital signed a 15-year, 300MW lease with a second IG hyperscaler — $7.5B in new contracted value, total now $23B+. Over 50% of revenue backed by investment-grade tenants. Initial operations mid-2027.
Goldman's semiconductor chief Covello recommends going long hyperscalers and underweight semis. Thesis: the market has already rewarded chip stocks, while hyperscaler valuation multiples are compressed by ROI skepticism. If cloud players demonstrate positive returns, their cash flow re-rates higher while semi upside compresses. Best-case scenario for the trade: hyperscalers show ROI, multiple expansion follows, and semi names actually get hurt by potential capex normalization.
↳ Cloud GPU supply is tapped out — top AMD providers (Vultr, DO, TW) are sold out of MI355x. H100 pricing at $3.39/hr and MI300x at $1.99/hr on DigitalOcean. Zero availability across bare metal.
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