The AI Supply Chain Saga: The Newest News

Some of the questions that keep business owners up at night:

• Is the AI world one that can physically be supplemented by Earth?
• If you were an investor, would you rather invest in AI stocks or in the commodities  AI depends upon?
• If someone owns stocks in AI, what are the risks? 
• What are the risks associated with commodities? 

Can the material world keep up with the digital dreams? It’s a legitimate question. 

Facts to consider:

AI does not run on code alone; it also runs on memory chips, power infrastructure (see previous blog on energy) copper, silver, rare earth metals. 

Data centres are the most demanding electronic systems ever being built and in 2025 they used 7 out of 10 of all memory chips produced in that year. Elon Musk claims he’ll need 200 million GPUs per year, within five years, to power his orbital data centres. Currently, only 20 million per year are produced. 

The impact of data centres on the earth’s resources is huge, as they are consuming as much energy as small cities. They also are monstrous consumers of rare earth metals and elements, and in addition, they produce massive amounts of heat. 

Apart from energy and water, the other most critical supply chains associated with these massive energy consumers are: 

• Silver
• Copper
• China (the country)

Silver:

Because it is thermally conductive, silver is essential to every component of the AI structure, it is the most electrically conductive element on the periodic table. As such, silver is irreplaceable in electronics: circuit boards, connectors, thermal materials, solder and switches and one cannot simply code your way out of a silver shortage. Silver mines are rare, therefore silver production is not escalating, but consumption is causing the deficit to accelerate; mostly due to data centres. 

Copper: 

Copper wiring and cables form the backbone of any electric infrastructure. It is impossible to build a data centre without copper. Neither copper nor silver has easy substitutes. Developing new copper mines takes 15 to 18 years and tight supply plus strong demand, are causing an explosion in the price of both metals.

The China Factor: 

China controls more than 80% of global rare earth processing capacity. Whoever controls the raw materials; controls the tech. 

What is Elon Musk’s solution to the earthly shortfall? He publicly stated recently that SpaceX will begin disassembling the moon to manufacture AI data centres! 

Wait. WHAT? 

Are we going to witness and become a multi-planetary, solar-system-spanning intelligence? Well … is the sky the limit? 

(Watch out for a future blog about the Dyson Swarm.)

In the meantime, back to our small (real) world: 

In the financial world, it seems as if investors are turning away from AI stocks and buying into commodities instead. The reasons, of course, are the associated risks. With AI stocks, you are betting on the technology as well as on the supply chains. You are betting on the availability, on the physical world keeping up with the digital hype. Is that realistic?

Investors are scheming and calculating while business owners … are kept up at night. The rest of us mere mortals are left gazing at the moon and the stars, wondering: could it all be possible?