AI demand is becoming a key driver of China's economy: China's chip exports are up to a record ~$290 billion over the last 12 months. This figure has more than doubled over the last 3 years. At the same time, computer and component shipments are up to ~$240 billion, the highest since 2022. Power equipment exports are up to a record ~$190 billion, with the growth accelerating over the last 2 years. This brings China’s total AI-related exports up to ~$720 billion over the last 12 months, an all-time high. Western demand for China-made AI hardware is surging.

AI Hardware Demand Growth and Representative US-Listed Companies June 2026 Executive Summary Nvidia’s transition to the Vera Rubin (VR200) platform marks a significant escalation in AI infrastructure complexity and cost. Our BOM teardown of the next-generation Rubin rack reveals a ~2x increase in total rack cost to approximately $7.8 million (vs. ~$4 million for GB300), driven not solely by the GPU/CPU but by sharp revaluations across the supply chain. Key highlights from downstream components include: • PCB content value +233% YoY, the largest increase. • MLCC +182%, reflecting higher density and count (e.g., ~600k MLCCs per VR200 NVL72 server, +30%+ vs. GB300). • ABF substrates +82%, power solutions +32%, and liquid cooling +12%. These upgrades align with broader AI scaling: 800G/1.6T optical transceivers ramping aggressively, glass-based technologies advancing for packaging and interconnects, and hyperscalers prioritizing performance, power efficiency, and thermal management. We expect sustained multi-year tailwinds for the AI hardware ecosystem into 2027+, with Rubin-driven demand accelerating in H2 2026. Investment Thesis: While Nvidia (NVDA) remains the core beneficiary, the supply chain offers diversified exposure. We favor companies with direct exposure to high-growth areas like advanced PCBs, high-speed optics, and glass substrates/optical interconnects. Risks include execution on new capacity, potential margin pressure from rapid scaling, and geopolitical supply chain factors. 1. PCB: Sharpest Value Uplift in Rubin BOM Morgan Stanley’s detailed analysis shows PCB content in the Rubin rack surging +233% versus GB300. This reflects needs for higher layer counts, advanced materials, better signal integrity, and larger formats to support increased power and interconnect density in AI servers. US Representative: TTM Technologies (TTMI) – Leading US PCB manufacturer with strong positioning in high-complexity boards for data center/AI applications. TTM has invested in capacity expansions (e.g., new facilities) to capture AI-driven demand for advanced HDI and high-layer PCBs. 2. MLCC: Density-Driven Surge Nvidia’s VR200 NVL72 platform requires ~600,000 MLCCs per server, over 30% more than GB300. Combined with the +182% value increase in the BOM, this underscores tightening supply for high-capacitance, high-reliability MLCCs in power delivery and decoupling for AI accelerators. Exposure Note: The MLCC market is dominated by Asian players (e.g., Murata, Samsung Electro-Mechanics, Yageo). US-listed indirect exposure may come through broader electronics or power solution providers, but direct pure-play opportunities are limited. Watch for capacity utilization tightness benefiting the ecosystem. 3. Optical Communication: 800G/1.6T Ramp Accelerating Chinese leader Zhongji Innolight reported Q1 2026 net profit +262% YoY, driven by strong 800G/1.6T shipments, with expectations of significant full-year growth. This mirrors industry-wide momentum as AI clusters shift toward higher-speed optics for reduced latency and power in scale-out/scale-up networking. Nvidia’s investments in photonics and CPO further validate the trend. US Representatives: • Coherent (COHR) and Lumentum (LITE): Key players in optical components and transceivers; Nvidia has made substantial equity investments to secure capacity. • Corning (GLW): Major beneficiary via optical fiber, connectivity, and glass technologies (detailed below). 4. Micro-LED/Glass Substrates & Optical Interconnects: Strategic Partnerships Accelerating On May 20, 2026, BOE announced a cooperation MOU with Corning covering glass-based encapsulation carriers, foldable glass, perovskite substrates, and optical interconnect applications. This aligns with industry shifts toward glass cores for superior flatness, thermal stability, and integration in advanced packaging and photonics—critical for next-gen AI as organic substrates hit limits. US Representative: Corning (GLW) – Central to Nvidia’s optical strategy with multi-billion partnerships, new US optical factories, and expansion in fiber/photonics for AI data centers. Recent deals position GLW for 10x+ capacity growth in key areas. AI Hardware Demand Growth & US-Listed Representative Companies Table Component Demand Growth (vs. GB300) Key Drivers US-Listed Reps Investment Rationale PCB +233% value Higher layers, HDI, signal integrity TTM Technologies (TTMI) Direct AI server/backplane exposure; US capacity expansion MLCC +182% value; +30%+ count Power density in servers Limited direct (ecosystem via power suppliers) Supply tightness supports pricing/volume Optical Comm (800G/1.6T) Strong ramp (e.g., +262% profit ex.) Scale-out networking, CPO transition Coherent (COHR), Lumentum (LITE), Corning (GLW) Nvidia investments; transceiver/fiber boom Glass Substrates/Interconnects Emerging (MOU-driven) Packaging, photonics, thermal/optical Corning (GLW) Nvidia factory deals; US manufacturing tailwinds Power & Liquid Cooling +32% / +12% Higher TDP (e.g., 2300W GPUs) Indirect (ecosystem) Secondary but critical for rack deployment Source: Morgan Stanley BOM analysis, company reports, industry data. Growth metrics approximate from Rubin teardown. Outlook & Risks We project robust 2026-2027 growth in AI capex, with Rubin shipments catalyzing another leg-up in component demand. Optical and advanced substrate shifts could extend the cycle beyond traditional GPU focus. Hyperscalers’ vertical integration and US onshoring (e.g., Corning/Nvidia factories) add resilience. Key Risks: Cyclical capex pauses, yield/execution challenges on new tech (glass/CPO), commodity volatility in passives, and intense competition in Asia-heavy segments. Valuation multiples in the space have expanded; selectivity is key. Recommendation: Overweight select supply chain names with strong Nvidia alignment (e.g., TTMI for PCBs, COHR/LITE/GLW for optics/glass). Monitor Q2 2026 earnings for confirmation of Rubin ramp momentum.

As AI and physical devices converge, Qwen is fueling the rise of physical AI across industries, unlocking smarter, more capable real‑world applications. Watch the video to see how it’s powering the next generation of AI hardware.⚙️

the AI hardware companion of the future wont be a new device that sits on your face or hangs around your neck it will be a combination of existing devices evolved, primarily airpods + apple watch the beauty in this approach is the progressive increase in how "invasive" the devices are to the experience 1. normal life: airpods (with cameras) give the AI real time insights into the world around you in the least invasive way possible. transparency mode allows you to hear everything as you normally do and consumers are used to having them in their ears 2. you engage with the AI and need information best shared visually, the apple watch screen provides this in a light weight way 3. the watch screen isn't enough, so and you need more consistent engagement with a screen, your phone takes you the rest of the way The goal of AI wearables is to be as minimally invasive as possible, not to push a digital overlay on top of everything you see. Further, apple has the supply chain and existing consumer relationship to dominate.

Physical AI & hardware investment is growing 20x faster than software investment this year. Building in the physical world with AI as a first class citizen is going to shape the next decade of investments. Path has been doing this for 8 years, it is not easy, it is not fast, but it is the future. The rise of embodied intelligence is happening

Low Power AI Is More Efficient ?! It's the The AI Hardware Show S2E10, with @sallywf ! Featuring @AxeleraAI, Kinara (now @NXP), @edgecortix, @MemryxInc, @SiMa_Inc, @ST_World

Elon Musk on why AI should care about humanity. "It’s important that we have an AI that cares about humanity, fosters humanity, and helps take us to other planets and other star systems." Musk says this is why SpaceX needs to succeed in both AI hardware and software. He believes an AI built by SpaceX would inherit the capabilities and values of the people building it. "SpaceX is a collection of some of the very best humans on Earth." For Musk, the goal isn't just to build smarter AI. It's to build AI that helps humanity survive, explore, and become a multiplanetary civilization.

Episode 9 of The AI Hardware Show with @sallywf This episode is the first on hyperscaler silicon. Lots of @Arm chips from @googlecloud, @awscloud, @AIatMeta and @Azure, and we even mention @Baidu_Inc