Who is dominating the AI hardware sector

A simple way to judge who holds the upper hand in the AI hardware sector is to see who is shouldering the financial risk.Memory: Clients are financing suppliers. Micron's clients, through 26 long-term supply agreements, have committed to providing it with $32 billion, mainly paid as cash prepayments. Of this, $12.7 billion has already been recorded on Micron's balance sheet.The same goes for lasers. Lumentum agreed to pay AXT a $43.5 million prepayment just to reserve indium phosphide wafers.But as we move downstream along the supply chain to AI chips, the situation changes dramatically.Broadcom is backing up to $29 billion in lease payments for a single client.NVIDIA has provided up to $105 billion in guarantees for land, power, and main structures for a data center construction project with OpenAI.pb: As reported last week, Broadcom's Wall Street syndicate is raising $60 billion in financing for companies such as Anthropic.In my view, this shows who really holds the bargaining power.For scarce memory and materials, clients prepay to secure supply.For AI computing power, suppliers are helping clients with financing so they can keep building.Of course, this analogy isn’t entirely accurate: the buyers receiving financing support include continually loss-making AI labs, while I guess Micron’s clients are probably much stronger financially.When a memory supplier can demand clients prepay billions of dollars in cash for capacity, that shows where the true scarcity lies.