While chip fabrication is complex, the most binding constraint for AI compute providers is physical infrastructure. The entire industry's growth is bottlenecked by the availability of powered data center buildings, a problem projected to persist for at least another 15-18 months.
NVIDIA's CUDA software, once its key advantage, is losing its grip. For inference, switching is trivial. More importantly, two of the three leading frontier models (from Google and Anthropic) were developed without CUDA, signaling a significant decline in its necessity for cutting-edge AI training.
The GPU architecture is economically optimized for slow AI inference, offering a very low cost per token. However, this efficiency plummets when speed is required, as the cost and power per token increase exponentially, creating a market for alternative architectures in high-speed applications.
Speed is crucial for all AI applications, not just interactive ones. For background "agentic" tasks, a faster system provides a compounding business advantage. If a competitor's AI can complete ten tasks while yours does one, that lead grows exponentially over time.
Beyond immense technical challenges, US chip manufacturing is stymied by short political cycles. Fabs require multi-administration timelines (5-6 years) and stable, long-term policy support, which is difficult to maintain in the American political system, creating a significant hurdle for reshoring.
The emerging market for AI compute financial instruments was kickstarted by CoreWeave. They innovated by using GPUs as collateral for debt, enabling them to fund huge infrastructure deployments ahead of competitors. This novel financing model is now becoming mainstream, paving the way for derivatives.
Unlike GPUs using slow, dense memory, Cerebras's wafer-sized chip leverages its vast surface area to accommodate faster, less-dense memory. This design sidesteps memory bottlenecks, achieving speeds up to 15 times faster than the fastest GPUs for AI tasks.
Though leading closed-source models are marginally superior, open-source alternatives provide a much better price-to-performance ratio. Users pay a steep premium for the last few percentage points of intelligence offered by proprietary models, making open source a highly cost-effective choice for many applications.
Hardware innovation culture is fundamentally different from software. Founders must be intrinsically motivated by the slow, deliberate, and expensive process of creating physical things. The reward is not quick iteration but conquering the immense difficulty of a process where mistakes are very costly.