Analyst Turns Bearish on Custom AI Chip Designers

Demand for AI computing is driving cloud providers to develop ASICs in-house, with Broadcom, MediaTek and Marvell serving as co-design partners that help Google and Amazon bring custom chips into mass production at TSMC. New Era Funds Chief Investment Officer Rihard Jarc said the industry's key leverage has shifted from design capabilities to allocations of advanced-process and memory capacity. Whether that moat can endure will shape how profits are distributed across the AI chip supply chain.

On June 25, 2026, semiconductor analyst Bubble Boi challenged that view, arguing that Google's frequent supplier changes point to limited design differentiation. TSMC capacity allocations became a bottleneck only after shipments exceeded 3.5 million chips, he said. He expects capacity expansion over the next one to two years to trigger price competition. Broadcom reported second-quarter revenue of $22.19 billion, including $10.8 billion from AI, but its shares still fell 13% after hours because it did not raise its full-year target.