The Shovel Sellers of the AI Cold War: A New Arms Race Beyond the Moon Landing, the Second Act of 'Money into Taiwan Stocks' is Just Beginning

Authors: Victor (@vcmktasa), Mr. Z (@168MrZ), 168X

Jensen Huang and Lisa Su are heavily deploying resources, while the Taiwanese supply chain is cashing in.

On October 4, 1957, the Soviet Union launched a 83-kilogram metal sphere into low Earth orbit. The signal from the world’s first artificial satellite kept Washington awake at night.

Eight years later, Kennedy declared, "We choose to go to the moon." Over the next decade, the Apollo program spent $257 billion (adjusted for today’s value) and mobilized 400,000 people, all to plant the national flag on another celestial body.

The Cold War taught the world one thing: when a great power defines a technology as "too important to lose," the scale of capital will detach from all commercial logic.

By 2026, the U.S. government’s AI infrastructure Stargate program alone will cost $500 billion over four years; major cloud service giants like Google and Amazon will spend over $600 billion annually.

The same script is being replayed in AI, with a scale ten times that of the moon landing. The competitors have shifted from the U.S. and the Soviet Union to the U.S., China, and the rest of the world.

During the Cold War, the scarce resources that determined victory were uranium mines and rocket engineers. This time, it’s advanced process wafers and advanced packaging capacity.

And 90% of these resources come from the same island: Taiwan.

1. The Mobilization Orders from Leaders: Presidents Personally Promote Factory Operations

The iconic image of the space race is Kennedy declaring the moon landing in Congress. The AI Cold War sees heads of state personally urging chip factories to ramp up production.

Washington. The Trump administration used CHIPS subsidies and a 25% tariff on chips to force manufacturing back to the U.S., while also promoting Stargate. Interestingly, there’s the "Trump Account": opening a $1,000 investment account for every newborn, directly investing in U.S. stock indices. This administration is not only waging a tech war but has also written "the stock market must rise" into the rules.

Seoul. South Korea unveiled a national investment plan worth 800 trillion won, with Samsung and SK Hynix each contributing 400 trillion to build new factories. By the end of June, Lee Jae-myung ordered at a government meeting: the review of semiconductor parks would shift from "sequential processing" to "simultaneous processing," with environmental assessments, land, and utilities all proceeding in parallel. He stated, "Victory depends on who runs faster."

Tokyo. Sanae Takaichi has positioned Rapidus as a national strategic pillar, with government subsidies totaling 2.6 trillion yen, even recalling retired senior engineers to train in the U.S. to catch up to the 2-nanometer starting line by 2027.

Taipei. The new ten major AI initiatives aim for a value of 15 trillion new Taiwan dollars, with the chip innovation plan targeting 300 billion over ten years and a robust power grid aiming for 546.5 billion over the same period; power supply guarantees until 2032, and the science park expanding by another 1,305 hectares over ten years.

Beijing. The National Fund's third phase is 344 billion yuan, with the 14th Five-Year Plan fully shifting to domestic alternatives. Blocked from advanced processes, China is opting for a national system to run its parallel competition.

Abu Dhabi. The sovereign fund MGX completed a $49 billion AI fund on July 1, one of the largest in history, already investing in 14 companies including OpenAI, Anthropic, and xAI. Oil dollars are now officially tied to computing power.

Six governments are ramping up for the same competition. This is the first time since the 1960s that humanity has witnessed this level of national mobilization.

And the money from the government differs fundamentally from that in the stock market: it has a duration of 5 to 15 years. No quarterly reports, no fear of corrections; once the budget is approved, it must be spent.

The 2000 internet bubble was supported by stock market sentiment, and when sentiment shifted, the money evaporated. This round is underpinned by national will.

In this competition, no participating country can withdraw midway.

2. Private Military Spending of Arms Dealers: Orders Extend to 2028

The Cold War had nations and arms giants.

The arms dealers of the AI Cold War represent an entire industry chain. And their military spending is fiercer than that of nations.

First, let’s look at computing. Whether designing chips or wanting to manufacture them, the world cannot bypass Taiwan.

On May 27, Jensen Huang stated at an employee meeting in Taipei:
"Four or five years ago, NVIDIA's annual spending in Taiwan was about $10 to $15 billion. Now, it has grown to $100 to $150 billion. Taiwan is booming."

NVIDIA's annual spending in Taiwan alone is equivalent to 10% of Taiwan's GDP. The product roadmap extends to 2028: Rubin, Rubin Ultra, and then the Feynman using TSMC's A16 process, with a new generation each year, each generation tied to Taiwan.

AMD's leader Lisa Su, like Huang, was born in Tainan. She holds two contracts of 6GW each, along with one from Meta exceeding $60 billion. The MI450 is entirely manufactured by TSMC from the computing core to packaging.

Intel's EMIB advanced packaging competes with TSMC's CoWoS, but once this technology scales, the biggest beneficiaries will be Taiwan's ASE and Unimicron. Every step Intel takes to challenge TSMC pulls Taiwan's packaging factories into its ecosystem.

Besides these three arms dealers, there’s a group of buyers spending even more aggressively: the cloud service giants.

Google and Amazon are both buying chips from NVIDIA while developing their own to reduce dependency. Google’s capital expenditure in 2026 is projected to soar to $175 billion, with TPU chips assigned to MediaTek and Creative; Amazon’s Trainium chips are assigned to United Microelectronics. Ultimately, all must be sent to TSMC for mass production.

Next, let’s look at the most scarce storage. Only three companies in the world produce HBM: Micron, SK Hynix, and Samsung.

Micron treats Taiwan as its largest DRAM base globally. After 31 years of deep cultivation in Taiwan, with investments exceeding 1 trillion new Taiwan dollars, it is Taiwan's largest foreign investor. In January this year, it announced an $1.8 billion acquisition of Nanya Technology’s wafer fab in Tongluo, Miaoli, focusing on advanced DRAM and HBM production and R&D.

All of the world’s HBM must queue up to enter TSMC's CoWoS production line.

At the very top of this chain are the cash-burning AI labs. In the first half of 2026, global venture capital financing reached a record $510 billion, with OpenAI and Anthropic alone taking 43%, about $217 billion. Once this money arrives, it all transforms into computing power orders.

Nations provide will, arms dealers provide orders. The final destination for shipments is all Taiwan.

3. Silicon Shield 2.0: The More Intense the Competition, the Thicker the Shield

92% of the world’s advanced process chips and 45% of advanced packaging capacity come from Taiwan.

For the past twenty years, this figure has been known as the "Silicon Shield": the most advanced chips can only be made in Taiwan, which is why TSMC is referred to as the "sacred mountain protecting the nation." However, as TSMC builds fabs in Arizona, Kumamoto, and Dresden, the market has begun to worry: will the relocation of capacity dilute this shield?

This is a misreading. The Silicon Shield is not disappearing; it is upgrading: from "Made in Taiwan" to "Made with Taiwan."

This is Kaohsiung. TSMC is simultaneously constructing five 2-nanometer fabs, with clean rooms covering an area equivalent to 46 football fields, and a single base investment exceeding 1.5 trillion new Taiwan dollars. Wei Zhejia repeatedly emphasizes that the most advanced processes and core R&D will all remain on the island. The core of the shield has not moved an inch.

This is Arizona. TSMC’s investment of $165 billion is the largest foreign manufacturing investment in U.S. history.

In the past, the Silicon Shield was solely borne by Taiwan; now, the Silicon Shield binds every ordering country onto the same ship.

How hard is this shield? Even NVIDIA's request for TSMC to increase capacity was rejected; Japan, which invested $16.3 billion in national capital, can only promise to "start" mass production of 2-nanometer chips in 2027; while TSMC’s annual capital expenditure is three times that of the Japanese government’s subsidies.

Every dollar invested by countries extends Taiwan’s economic strength outward by an inch.

4. Taiwan Stocks Rise to Fifth in the World: The Explosive Moment for the Shovel Sellers

The most stable winners of the 1849 Gold Rush were not the gold miners but the shovel sellers.

Taiwan is the shovel seller in this AI arms race, but this time it’s even fiercer, as this time, not everyone can make the golden shovel.

By the end of May this year, the total market value of Taiwan stocks surpassed India, ranking fifth in the world, only behind the U.S., China, Japan, and Hong Kong.

Global capital is re-voting: the bottleneck of AI lies in Taiwan. But this is just the first act; the second act is just beginning.

The first act is about the leaders setting the direction. NVIDIA has tied all global computing power orders into Taiwan’s processes, packaging, and server systems. Major weighted stocks like TSMC, MediaTek, and Delta Electronics have led the surge, re-evaluating Taiwan stocks from an "Asian manufacturing market" to an "AI infrastructure market." Once the leaders have proven the direction, the next question for capital will be: as orders flow down, who has the greatest flexibility?

The U.S. stock market experienced a similar script in 2020. In the first wave after the pandemic, the market bought into giants like Apple, Amazon, Microsoft, and Tesla because they first proved that cloud, digitalization, and electric vehicles were the big directions; but by the end of 2020, the trend began to spill over, with the Russell 2000 small-cap index first breaking 2,000 points and reaching a historical high in 2021.

The trend is not over; it has shifted from "buying leaders" to "buying flexibility." Today’s Taiwan stocks are also following this rhythm.

Jensen Huang’s annual investment of $100 to $150 billion in Taiwan will not stop at TSMC; it will spread to packaging, testing, servers, cooling, power supply, and factory engineering. The leaders consume the ocean, while the smaller players benefit from the overflow; the same capital expenditure, when placed on small-cap companies, has completely different flexibility.

Even more interestingly, the cloud service giants’ self-developed chips remain a boon for Taiwan. Google TPU, Amazon Trainium, and Meta MTIA, the AI arms race will ultimately return to Taiwan to get their shovels.

The leaders have completed the task of showing the world Taiwan; now the market needs to reprice the smaller players delivering for the leaders.

The shovel sellers quietly making big money are hidden within the entire supply chain.

5. Money into Taiwan Stocks Second Act: A Generational Wealth Redistribution in the AI Cold War

In the last great power Cold War, humanity sent rockets to the moon. This time, the AI Cold War has no endpoint.

In the past, Taiwan was merely a processing base; now, Taiwan is the arms base of the AI Cold War. Previously, the question was whether Taiwan stocks could keep up with U.S. stocks; now the question has reversed: without Taiwan, where will the U.S. giants realize their AI dreams?

This is the most critical truth of this generational wealth redistribution: money starts from all over the world and ultimately flows to where deliveries can be made.

2025 to 2026 is the first act, where the market re-evaluates TSMC and leading stocks.

2026 to 2028 is the second act, where global capital floods into the small and medium-sized stocks in the Taiwanese supply chain.

Those who missed the first half of the AI trend cannot afford to miss the second half of the Taiwan stock frenzy.

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