Abstract
We analyze how four forces restructure the AI industry over 2026-2030: the DRAM/HBM price surge, frontier-capable open-weight models (GLM-5.2), rapid inference-efficiency gains (near-Shannon-limit KV-cache compression, lightweight local runtimes), and the entry of Meta and xAI into compute resale on fleets bought before the memory repricing. Formulating inference economics in dollars per petabyte of bandwidth delivered (\$/PB) -- model-agnostic for bandwidth-bound decode -- we show the entrant-incumbent cost gap never closes: a depreciation conveyor delivers newly amortized fleets to incumbents faster than hardware prices normalize (3.2x in 2026, 1.9x in 2027, re-widening to 3-4x by 2029-30). Training bifurcates into a luxury tier (\$18-38B per frontier run by 2030) and a mass tier (previous-frontier parity via RL/distillation falling toward \$5M). Solvency of the announced buildout is confined to a corridor requiring roughly 2x annual token-demand growth for four years with sticky premium pricing; a measurement critique shows public token trackers overstate monetizable demand, and all pre-Q2-2026 projections predate the industry's shift from token maximization to token minimization. A vintage-breakeven analysis finds 2026 and 2028-29 capacity each fatally exposed to one pricing regime, with only the 2027 vintage robust. A greenfield custom-silicon entrant removes the merchant margin but not the memory premium (central outcome: 25% success/34% mediocre/41% loss, improvable via staged go/no-go gates). China's LineShine LX2 -- domestic HBM on a standard ISA -- decouples its cost curve from the memory crisis. Scenario probabilities: Rotating Landlord Oligopoly 25%, Commoditization Crash 25%, Jevons Absorption 20%, System-Layer Re-differentiation 18%, Geopolitical Bifurcation 12%. Solvency now depends on monetized bandwidth demand, premium stickiness, and vintage ownership.
Abstract (translated)
URL
https://arxiv.org/abs/2607.07207
