Let me state the conclusion first: I believe the rally in the memory sector is nearing its end, and I am bullish on the software sector going forward.

If we compare the AI industry to gold prospecting, hardware companies are like the ones selling shovels, while software and application companies are the actual miners. Selling shovels is certainly a safe and sure bet with the highest certainty, but whether the entire industry can ultimately make money depends on whether the application layer can strike gold.

Currently, the market is generally bearish on the software industry, believing it will be disrupted by AI. But have you considered that if the application layer fails to deliver in the future, the shovel sellers are just castles in the air and will collapse too.

What’s even more absurd is that originally, the profits from selling shovels were all taken by NVDA, AVGO, and others—at least these are American companies, so the money just moves from one pocket to another. But now we find that the raw materials for producing shovels are in short supply (HBM), and ironically, the raw material suppliers have started taking the lion’s share of the profits.

From an industry chain perspective, everyone knows the current bottleneck is memory. But from a political standpoint, this situation is unsustainable. The US has painstakingly laid out the entire AI industry chain, only to find that the biggest chunk of profits ends up being taken by South Korea, its little brother.

This collective price increase by Apple and Microsoft is a form of pressure on the Trump administration. I believe Trump will step in and take action. On one hand, he will introduce ChangXin Memory Technologies and others to meet part of the consumer demand. On the other hand, he will politically pressure the South Korean government to force the two companies to expand capacity and cap prices.

The South Korean bastards are too cunning. They finally got a golden opportunity for the industry and want to drain the pond to catch all the fish, which may ultimately lead to their own retail investors who chase the rally being ruined along with their families. In this regard, TSMC is much smarter. Although it monopolizes the global market, it only earns reasonable profits for itself, allowing it to do business sustainably and even become the guardian mountain of the nation.