**[AI Chip Boom Conceals Crash Risks: Philadelphia Semiconductor Index Drops Nearly 14% Since October, Customers Caught in Cycle Reversal]** BlockBeats News, October 17 — The AI boom has driven semiconductor companies to record-breaking profits, but the market is beginning to worry that the industry may repeat a cyclical crash. According to data cited in the article, global semiconductor sales growth in the first half of 2026 is projected to reach its highest level since the 1980s. TSMC has posted record profits for six consecutive quarters, while Samsung Electronics has achieved record profits for four consecutive quarters. However, the Philadelphia Semiconductor Index has fallen nearly 14% since October 6, prompting investors to reassess the sustainability of the AI supercycle. Unlike previous cycles, this round of semiconductor expansion is characterized by higher supplier concentration and stronger corporate cash flows. TSMC's capital expenditures are expected to reach approximately $62 billion this year and may rise to $76 billion next year, with its expansion primarily funded by operating cash flow rather than large-scale debt issuance. The advanced process and memory chip markets are concentrated among a few manufacturers, which has strengthened suppliers' pricing power. More notably, chip companies are transferring part of the demand risk to customers through long-term contracts. NVIDIA has committed over $250 billion to secure chip supplies and related components through January 2029. Micron, through "take-or-pay" contracts, has locked in portions of its business through 2030, with commitments amounting to $32 billion. These contracts require customers to pay as agreed even if they do not take delivery. This means that even if the AI investment frenzy subsides, chip manufacturers may still benefit from prepayments and long-term orders, while customers will bear greater procurement and financial risks. However, if demand plummets and capital expenditures shrink, chip prices, corporate profits, and high-valuation stocks could still face significant impacts. The cyclical nature of the semiconductor industry may not disappear, but the costs of the next downturn may be shared between suppliers and customers. [Original Link]