March 21, 2025 • 9 mins
The rush into artificial intelligence - spurred by the success of ChatGPT - has propelled a handful of technology companies into market superstardom. Nvidia, SK Hynix, ASML and TSMC have seen their share prices soar as their products lead the market in the chips that power AI. Our tech reporter Mark Bergen joins host Stephen Carroll to discuss the scale of their success, and what could disrupt it.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. I'm Stephen Carroll and
this is Here's Why, where we take one new story
and explain it in just a few minutes with our
experts Here at Bloomberg. Chat shopt fast as app in
the world to one hundred million users and today well
(00:24):
over three hundred million users. We're the very beginning of
a twenty year cycle where productivity will really increase using
these technologies. It'll change everything.
Speaker 2 (00:33):
It'll be integrated into every business.
Speaker 1 (00:36):
Chat GPT has been a game changer in artificial intelligence.
The sudden rush into large language models has propelled a
handful of companies into markets superstars. So it is in
video Day, happy in video data all who celebrate t
SMC revenue climbing thirty nine percent in the first two
months of the year. Korean shipmaker sk Highnecks delivering record
(00:57):
quarterly profit. Previous revolutions in technology, like with personal computers
or search engines, have created industry giants. This time around,
the scale is even bigger. Here's why AI is creating
the biggest monopolies in history. Our technology reporter Mark Bergen
(01:18):
joins me now for more. Mark, who are first of
all these megastars of AI and what do they do.
Speaker 2 (01:24):
The household name now is in Nvidia, which has gone
from this sort of in the past few years a
niche chips company mostly for the gaming industry into one
of the world's largest, multi trillion dollar companies sort of
associated with this AI boom, and they are of course
the primary company designing what are called AI accelerators, basically
the chips that go into these data centers that make
(01:45):
things like CHATBT work. What we found in this really
interesting is that behind those companies are actually three of
their suppliers and partners that have a somewhat justice fortified
market position. So in Vidia has about ninety two percent
of the market for a accelerator, which is just phenomenal.
There's a company called sk Heinex out of Korea that
(02:07):
produces memory chips and some of the highest end memory
chips that go into the sort of GPUs that in
video makes. They have and estimates maybe eighty percent of
that market. There is TSMC, which produces the chips for
Nvidia and a lot of the rest of the world.
They have for the AI chips maybe ninety five percent.
Then there's a Dutch company called ASML that makes these
(02:27):
very expensive lithography machines that are necessary to build these chips,
and they have for those specific types of lithography machines
that are making these chips one hundred percent market show
no other company in the world.
Speaker 1 (02:40):
And is that how we can qualify them as monopolies?
I mean, that's a big word in the business roils
when we talk about enough.
Speaker 2 (02:45):
It is, Yeah, And I think it should be very clear,
and we say this in the story that there's a
difference here where between the sort of definition of monopoly
around the market share and the legal definition of a
monopoly which may be associate with anti competitive behavior. And
so far there've been so anti trust cases opened against Nvidia,
but no findings about these poor companies that they've demonstrated
(03:07):
anti competitive behavior in getting this positions. So I think
maybe they're not necessarily what we call an abusive monopoly.
Speaker 1 (03:14):
They're just good at what they do. I suppose it'd
be another way to look at it as well.
Speaker 2 (03:17):
Yeah, I think that's one of several factors behind why
we have these positions.
Speaker 1 (03:22):
They have huge market shares. You say in these areas,
are there any competitors that we should be watching that
could potentially disrupt that.
Speaker 2 (03:29):
One of the things that's happening in AI and this
moment is everything is moving much faster than sort of
the historical timelines for technology sectors or something like the
personal computing and mobile phones and browsers. In Nvidia is
certainly the most prominent and had gained the most from
the AI boom. In some ways, is the most vulnerable
(03:51):
here in part because they have this really fascinating dynamic
where their biggest customers are now effectively coming to compete
with them. Almost half their revenue comes from the big
giants of Silicon Valley. They have Microsoft, Amazon, Google, and Meta.
All of those companies, how have been exploring to various
degrees alternatives to in video, whether it's through partnerships, whether
(04:14):
it's to building their own customs chips and Google's cases,
Google's had a custom chip for a long time, certainly
developing that. Amazon, as we reported, has done some very
aggressive in house design, right these companies don't want to
be reliant on a partner like that for something they
see is so mission critical opening eye, it's been some
reporting has also been designing its own custom chip. To
(04:35):
be clear, like we haven't seen this reflected at all,
and in video sales or its projections. There are a
number of startups that have come around that are also
trying to replicate what in video's done or try to
produce like a next generation of chip. Intel is probably
the most interesting example right now. They just got a
new CEO who has signaled that there want to get
(04:55):
into this, and we call the foundry game basically being
a factory like TSMC, Samsung has probably been the closest
competitor sk Heinez has a lot of more competition there
in the memory chips of Samsung, you have Micron, and
at this point ASML is probably of those four the
most entrenched. Unless some sort of black Swan event happens,
(05:16):
it's very unlikely that we're going to see another company
develop that machinery and those supply chain partnerships to compete
our competition.
Speaker 1 (05:25):
Regulators worried about these companies and the I suppose dominance
they have in these spaces.
Speaker 2 (05:33):
I think short answer is yes and no. We've seen
in Vidia's case, the Department of Justice last year had
opened a potential case and as far as our reporting shows,
the concerns here is that they are kind of bundling
their software with some of their hardware products, where it
basically makes it really difficult for say, someone to use
a different type of chipset, because in video software is
(05:55):
so prominent and so widely used across AI. If you're
building a chatpot, if you're building a large language. One
of the reasons that in Vidia has grown so well
is because they were out in ahead of having this
support software that worked really well with these chips The company,
to be clear, has pushed back on that and said,
you know, it doesn't bundle its software. It has a
lot of faces, a lot of competition. There was some
(06:16):
scrutiny around an acquisition they made this Israeli company that
makes off were called run Ai, and I've talked to
some people who have some critics who point out that
this is sort of a traditional move that they've seen
of other companies building these kind of walled gardens. In
the US. Certainly, the Trump administration seems to be the
signaled less interest instead of going after monopolies than the
(06:37):
Biden administration. We haven't seen in that acquisition of run
Ai by in Vidia cleared in both the US and
the EU, which has traditionally been much more aggressive about monopolies.
So as far as there's certainly not, say, the antitrust
concerns about Google or microsoftist paced in the past, or
(06:58):
even going back further in the hardware the companies like
IBM that faced Mark.
Speaker 1 (07:02):
You've been reporting on the tech industry for many years.
I wonder how you compare this moment and the emergence
of these giants in artifacial intelligence chips to previous big
bang moments in tech. Is this an iPhone moment? Is
this a Google moment in search engines?
Speaker 2 (07:19):
I say it's more of a Wintel moment, which is
less familiar maybe, But the Wintel is that term for
the combination of Microsoft and Intel sort of duopoly around
personal computers that form in the eighties and really solified that.
You know, every single desktop computer that shipped had Microsoft
software with it and had an Intel chip inside. And that,
(07:41):
to be clear, is that that's still a fairly dominant
market position at this point. A lot of the market's attention,
a lot of the legal and political tension has shifted
sage to mobile and maybe now shifting to AI. But
we're still you know, you and I are looking at
PCs right now. Is they're still prominent parts of life,
and most of them still ship with Microsoft and Intel.
(08:04):
I think just because you know, the ship industry has
traditionally had companies that have tended to dominate particular components
or niches. That's not necessarily new. But what is new
is the attention that this is receiving, I say, globally
politically and certainly in the market. Right that the companies
look and Vidia and its partners, the amount of money
(08:28):
tied up with them in the market and the amount
of money tied up in this thesis that they're just
going to be increased increased in spending around AI and
AI hardware. That is unprecedented.
Speaker 1 (08:40):
Okay, Mark Bergen, our technology reporter, Thank you very much.
For more explanations like this from our team of three
thousand journalists and analysts around the world, go to Bloomberg
dot com slash explainers. I'm Stephen Carroll. This is here's why.
I'll be back next week with more. Thanks for listening.
Bloomberg Audio Studios, podcasts, radio news. I'm Stephen Carroll and
this is Here's Why, where we take one new story
and explain it in just a few minutes with our
experts Here at Bloomberg. Chat shopt fast as app in
the world to one hundred million users and today well
(00:24):
over three hundred million users. We're the very beginning of
a twenty year cycle where productivity will really increase using
these technologies. It'll change everything.
Speaker 2 (00:33):
It'll be integrated into every business.
Speaker 1 (00:36):
Chat GPT has been a game changer in artificial intelligence.
The sudden rush into large language models has propelled a
handful of companies into markets superstars. So it is in
video Day, happy in video data all who celebrate t
SMC revenue climbing thirty nine percent in the first two
months of the year. Korean shipmaker sk Highnecks delivering record
(00:57):
quarterly profit. Previous revolutions in technology, like with personal computers
or search engines, have created industry giants. This time around,
the scale is even bigger. Here's why AI is creating
the biggest monopolies in history. Our technology reporter Mark Bergen
(01:18):
joins me now for more. Mark, who are first of
all these megastars of AI and what do they do.
Speaker 2 (01:24):
The household name now is in Nvidia, which has gone
from this sort of in the past few years a
niche chips company mostly for the gaming industry into one
of the world's largest, multi trillion dollar companies sort of
associated with this AI boom, and they are of course
the primary company designing what are called AI accelerators, basically
the chips that go into these data centers that make
(01:45):
things like CHATBT work. What we found in this really
interesting is that behind those companies are actually three of
their suppliers and partners that have a somewhat justice fortified
market position. So in Vidia has about ninety two percent
of the market for a accelerator, which is just phenomenal.
There's a company called sk Heinex out of Korea that
(02:07):
produces memory chips and some of the highest end memory
chips that go into the sort of GPUs that in
video makes. They have and estimates maybe eighty percent of
that market. There is TSMC, which produces the chips for
Nvidia and a lot of the rest of the world.
They have for the AI chips maybe ninety five percent.
Then there's a Dutch company called ASML that makes these
(02:27):
very expensive lithography machines that are necessary to build these chips,
and they have for those specific types of lithography machines
that are making these chips one hundred percent market show
no other company in the world.
Speaker 1 (02:40):
And is that how we can qualify them as monopolies?
I mean, that's a big word in the business roils
when we talk about enough.
Speaker 2 (02:45):
It is, Yeah, And I think it should be very clear,
and we say this in the story that there's a
difference here where between the sort of definition of monopoly
around the market share and the legal definition of a
monopoly which may be associate with anti competitive behavior. And
so far there've been so anti trust cases opened against Nvidia,
but no findings about these poor companies that they've demonstrated
(03:07):
anti competitive behavior in getting this positions. So I think
maybe they're not necessarily what we call an abusive monopoly.
Speaker 1 (03:14):
They're just good at what they do. I suppose it'd
be another way to look at it as well.
Speaker 2 (03:17):
Yeah, I think that's one of several factors behind why
we have these positions.
Speaker 1 (03:22):
They have huge market shares. You say in these areas,
are there any competitors that we should be watching that
could potentially disrupt that.
Speaker 2 (03:29):
One of the things that's happening in AI and this
moment is everything is moving much faster than sort of
the historical timelines for technology sectors or something like the
personal computing and mobile phones and browsers. In Nvidia is
certainly the most prominent and had gained the most from
the AI boom. In some ways, is the most vulnerable
(03:51):
here in part because they have this really fascinating dynamic
where their biggest customers are now effectively coming to compete
with them. Almost half their revenue comes from the big
giants of Silicon Valley. They have Microsoft, Amazon, Google, and Meta.
All of those companies, how have been exploring to various
degrees alternatives to in video, whether it's through partnerships, whether
(04:14):
it's to building their own customs chips and Google's cases,
Google's had a custom chip for a long time, certainly
developing that. Amazon, as we reported, has done some very
aggressive in house design, right these companies don't want to
be reliant on a partner like that for something they
see is so mission critical opening eye, it's been some
reporting has also been designing its own custom chip. To
(04:35):
be clear, like we haven't seen this reflected at all,
and in video sales or its projections. There are a
number of startups that have come around that are also
trying to replicate what in video's done or try to
produce like a next generation of chip. Intel is probably
the most interesting example right now. They just got a
new CEO who has signaled that there want to get
(04:55):
into this, and we call the foundry game basically being
a factory like TSMC, Samsung has probably been the closest
competitor sk Heinez has a lot of more competition there
in the memory chips of Samsung, you have Micron, and
at this point ASML is probably of those four the
most entrenched. Unless some sort of black Swan event happens,
(05:16):
it's very unlikely that we're going to see another company
develop that machinery and those supply chain partnerships to compete
our competition.
Speaker 1 (05:25):
Regulators worried about these companies and the I suppose dominance
they have in these spaces.
Speaker 2 (05:33):
I think short answer is yes and no. We've seen
in Vidia's case, the Department of Justice last year had
opened a potential case and as far as our reporting shows,
the concerns here is that they are kind of bundling
their software with some of their hardware products, where it
basically makes it really difficult for say, someone to use
a different type of chipset, because in video software is
(05:55):
so prominent and so widely used across AI. If you're
building a chatpot, if you're building a large language. One
of the reasons that in Vidia has grown so well
is because they were out in ahead of having this
support software that worked really well with these chips The company,
to be clear, has pushed back on that and said,
you know, it doesn't bundle its software. It has a
lot of faces, a lot of competition. There was some
(06:16):
scrutiny around an acquisition they made this Israeli company that
makes off were called run Ai, and I've talked to
some people who have some critics who point out that
this is sort of a traditional move that they've seen
of other companies building these kind of walled gardens. In
the US. Certainly, the Trump administration seems to be the
signaled less interest instead of going after monopolies than the
(06:37):
Biden administration. We haven't seen in that acquisition of run
Ai by in Vidia cleared in both the US and
the EU, which has traditionally been much more aggressive about monopolies.
So as far as there's certainly not, say, the antitrust
concerns about Google or microsoftist paced in the past, or
(06:58):
even going back further in the hardware the companies like
IBM that faced Mark.
Speaker 1 (07:02):
You've been reporting on the tech industry for many years.
I wonder how you compare this moment and the emergence
of these giants in artifacial intelligence chips to previous big
bang moments in tech. Is this an iPhone moment? Is
this a Google moment in search engines?
Speaker 2 (07:19):
I say it's more of a Wintel moment, which is
less familiar maybe, But the Wintel is that term for
the combination of Microsoft and Intel sort of duopoly around
personal computers that form in the eighties and really solified that.
You know, every single desktop computer that shipped had Microsoft
software with it and had an Intel chip inside. And that,
(07:41):
to be clear, is that that's still a fairly dominant
market position at this point. A lot of the market's attention,
a lot of the legal and political tension has shifted
sage to mobile and maybe now shifting to AI. But
we're still you know, you and I are looking at
PCs right now. Is they're still prominent parts of life,
and most of them still ship with Microsoft and Intel.
(08:04):
I think just because you know, the ship industry has
traditionally had companies that have tended to dominate particular components
or niches. That's not necessarily new. But what is new
is the attention that this is receiving, I say, globally
politically and certainly in the market. Right that the companies
look and Vidia and its partners, the amount of money
(08:28):
tied up with them in the market and the amount
of money tied up in this thesis that they're just
going to be increased increased in spending around AI and
AI hardware. That is unprecedented.
Speaker 1 (08:40):
Okay, Mark Bergen, our technology reporter, Thank you very much.
For more explanations like this from our team of three
thousand journalists and analysts around the world, go to Bloomberg
dot com slash explainers. I'm Stephen Carroll. This is here's why.
I'll be back next week with more. Thanks for listening.
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