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Semiconductor Resurgence: How CAPEX Cycles Predict the Next Market Leaders
- Elias Zeekeh, MBA, CPA, CMA
- Oct 31
- 1 min read
The global semiconductor industry is in the throes of an AI-fueled CAPEX supercycle, where multi-billion-dollar investments in advanced nodes and infrastructure are reshaping competitive landscapes. As fabs exceed $20 billion in cost and TSMC commits $38-42 billion annually to 3nm/2nm pursuits, capital intensity has reemerged as the ultimate moat—confining leadership to those with scale, discipline, and foresight.
AMD and Broadcom exemplify this shift through contrasting yet synergistic strategies. AMD counters volatility with aggressive expansion: Q2 2025 revenues hit $7.7 billion, data center up 57% YoY, fueled by EPYC CPUs, MI350 GPUs (35x inference gains), and acquisitions like ZT Systems. As a fabless player tied to TSMC, it leverages partnerships to capture server share (41% revenue, 27% units) without bearing fab burdens.
Broadcom dominates via efficiency and lock-in: Q3 revenues soared 22% to $15.95 billion, AI at $5.2 billion (+63%), powered by 75% custom ASIC share with hyperscalers (e.g., $10B OpenAI deal), high-speed networking (Thor 800G), and VMware's recurring revenues—all on minimal $100M quarterly CAPEX, yielding $7B+ free cash flow.
Strategic CAPEX now drives enduring pricing power: TSMC's 2nm wafers at $30,000 reverse transistor cost declines, while HBM premiums soar fivefold. Yet risks loom—geopolitics, NVIDIA's 80-85% AI grip, and sky-high valuations (AMD ~60x, Broadcom >100x).
In a march toward $1 trillion industry revenue by 2030, counter-cyclical investors like AMD (growth-oriented) and Broadcom (stable cash flows) are poised to lead. Discover how CAPEX cycles forecast tomorrow's winners in Axum's latest research.
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