Chip shortages may ease, but rising costs are putting a new question at the center of the AI boom: ROI.
Intel CEO Lip-Bu Tan. Photo: Getty Images
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The chief executives of Intel and Broadcom are warning the AI industry that the main constraint in its development will be access to capital.
According to CNBC, at the DBS Asia Future Forward Conference in Singapore on Monday, Broadcom CEO Hock Tan said cash flow could be the bigger obstacle to AI expansion rather than shortages of infrastructure. As the AI industry continues to boom, CEOs are looking to invest further, but are also increasingly becoming wary of its volatility and future.
Intel CEO Lip-Bu Tan echoed the same concerns about financing, according to CNBC. The tech leader pointed to the rising cost of capital for AI tokens and whether companies should continue investing.
“If there’s any challenge in the front, it’s capital and the cost of capital, and then the other part is in the longer run, people want to see the ROI,” Lip-Bu Tan said.
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AI costs are driven by physical infrastructure, as well as data processing for model training, and ongoing usage fees. In recent years, costs have skyrocketed due to expanded use. According to Bloomberg, Meta Platforms, Amazon, Microsoft, and Alphabet are expected to spend roughly $750 billion in capital expenditures for AI this year alone.
″[In the] last two years we have seen a series of bottlenecks that keep coming out, but then we overcome it,” Hock Tan said at the conference. “Memory shortage today might not be that way a year from now.”
Tan expanded on the issue, stating that the industry was experiencing supply bottlenecks over the past two years, but expects those constraints to ease as production capacity increases, according to CNBC.