Highlights

• Tech columnist Tim Culpan argues today's AI infrastructure boom resembles the memory-chip glut more than the dot-com bubble, driven by commoditized token output and relentless capital expenditure pressure.
• If AI shifts into cost-cutting mode, ripple effects could hit NdFeB magnet manufacturers and rare-earth refiners through deferred investment and squeezed electrification timelines.
• Unlike DRAM, rare-earth magnet supply chains remain geopolitically constrained and structurally non-commoditized, insulating them from overnight price collapse but not cyclical headwinds.

In his December 3, 2025 Substack essay This AI Bubble is More Memory Than Dot Com (opens in a new tab), Tim Culpan — a Taipei-based technology columnist and one of the most credible observers of Taiwan–China semiconductor supply chains — argues that today’s AI boom resembles not the late-1990s dot-com frenzy, but the memory-chip glut that followed. Rare Earth Exchanges engages with Culpan’s work and finds his framework highly relevant for readers tracking long-cycle industrial risk, particularly in the Taiwanese semiconductor sector.

Culpan’s core warning is that AI companies are pouring unprecedented capital into data centers and “AI factories” that generate a commodity — tokens — much like DRAM or NAND bits. As in memory, he argues, the economics are unforgiving: razor-thin margins, negligible switching costs, and fast-depreciating hardware that forces firms into a perpetual capex treadmill. In his telling, today’s AI players may face the same fate as early-2000s memory manufacturers — heavy investment, shrinking differentiation, and eventual consolidation.

For Rare Earth Exchanges, this critique lands close to home. NdFeB magnets — central to EV drivetrains, wind turbines, precision robotics, and nearly every defense platform — are one of the few industrial inputs that remain structurally non-commoditized. They require high capex, complex chemistry, and geopolitically constrained feedstocks. If AI infrastructure does commoditize and the sector shifts into cost-cutting mode, the ripple effects could hit magnet manufacturers and rare-earth refiners through deferred capex, squeezed margins, or delayed electrification timelines. A slowdown in AI-driven cloud expansion could also bleed into the broader appetite for motors, generators, and high-performance magnetics.

Nuance and Perspective Checks

Culpan’s background is in semiconductors and Taiwan/China supply chains — an area where commoditization, price cycles, and brutal overcapacity are the rule, not the exception. That lens is valuable but may underweight the physical, long-lived infrastructure economics of rare-earth magnet production, where geology, permitting, and statecraft matter as much as capex efficiency. Memory chips can collapse in price overnight; magnet supply chains cannot be duplicated or swapped out with the same ease. And while Culpan sees AI tokens converging toward commodity status, magnet demand tied to EVs, defense, and renewable power is structurally less elastic.

In short, Culpan’s “memory versus dot-com” framing is an essential cautionary tale about capex-driven booms built on commoditized outputs. It’s a lens worth applying to any industry — including rare earths — but magnets are not DRAM, and the geopolitical chokepoints that govern rare-earth production simply don't behave like semiconductor cycles.

See Tim’s Substack (opens in a new tab).

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