Chip stocks fell on October 12 as Broadcom CEO Hock Tan and Intel CEO Lip-Bu Tan warned that financing and the cost of capital could constrain the expansion of AI infrastructure. Investors are weighing continued demand for computing capacity against questions about how data-centre projects will be funded and whether they can generate adequate returns.
Hock Tan says capital could be a bigger constraint than chips or power
Speaking at the DBS Asia Future Forward Conference in Singapore, Hock Tan said the bottlenecks to AI expansion may extend beyond processors, memory chips and electricity. Access to capital, he suggested, could become a more significant limit on construction.
AI infrastructure requires sustained spending on data centres, servers and related equipment. For chipmakers, tighter financing conditions could slow customers’ plans to add computing capacity, affecting equipment orders and revenue expectations across the supply chain. Tan’s comments put the availability of project funding alongside hardware supply as a focus for investors.
Lip-Bu Tan points to borrowing costs and returns
Intel CEO Lip-Bu Tan also highlighted capital constraints, saying higher borrowing costs could put pressure on AI development. Over the longer term, he said, markets will need to see returns from AI investment.
His remarks covered two key parts of infrastructure spending: the cost of raising funds and whether those investments produce commensurate returns. If financing becomes more expensive or returns remain unclear, projects could move ahead more slowly. Neither CEO said demand for AI computing infrastructure had weakened; both remained positive on near-term demand.
Semiconductor index posts fourth straight decline
As investors weighed the comments, chip stocks came under pressure. The Philadelphia Semiconductor Index (SOX) fell for a fourth consecutive session on October 12, extending its recent retreat. Broadcom (AVGO) and Intel (INTC) were among the companies in focus.
The decline underscores that assessments of the AI investment cycle depend on more than demand for computing power. Data-centre expansion also hinges on financing conditions, capital costs and project returns. Investors are watching whether those constraints could affect the scale and pace of future investment, even as the two executives remain upbeat about near-term demand.