Two important speeches (from President Trump and Secretary of State Rubio) on leftwing threats to America, more welfare state fraud uncovered by Nick Shirley, Ukraine continues to hit Russian ships at will, multiple marine drone attacks, TSMC has a good week (and pledges to invest more money in America), Apple sues OpenAI, and Bruce Sterling compares AI to jazz.
Trump announced a massive declassification of documents showing how exposed our election system is to hacking and foreign interference. Top White House aides and intelligence agency chiefs have all reviewed and authenticated the documents.
The documents highlight major areas of concern. Starting in 2020, Beijing carried out the largest-ever compromise of election data. Some 220 million American voters’ files were meddled with by Chinese intelligence services. China signed a data exploitation unit for this project.
Members of the Deep State within the IC worked to suppress and downplay the scope and impact of China’s election interference. U.S. spy agencies discovered that the voter data breach in 18 states was bought, stolen, or hacked by China. That breach was kept hidden; Trump, who was still president at the time, was not informed, nor was Congress. The line was that the 2020 election was the most secure in history.
CIA reported in mid-2018 that the Chinese Communist Party’s strategy was to leverage all domestic and foreign elements opposed to Trump. In mid-2019, China’s approach was to undermine domestic confidence during the first Trump presidency. The Chinese government aimed to identify anti-Trump reporters and pay them large sums of money to produce stories that cast Trump in a negative light.
The FBI obtained raw intelligence indicating that China’s activities included efforts to produce illegal ballots for Joe Biden. These were kept out of the presidential briefing. One analyst admitted to intentionally downplaying Chinese election activities. Another official stated she was running a shadow government to keep intelligence on China’s election interference away from the media and the White House. Numerous burn bags have been found.
Americans were lied to about the security of our election systems, including voting machines. They’re highly susceptible to attack. Russia, China, Iran, North Korea, and non-state actors have the ability to compromise our election infrastructure.
Michigan police raided a Democrat GOTV organization and were so concerned they contacted the FBI in Detroit. The documents state that canvassers signed voter registration forms in other people’s names, registered nonexistent individuals, and got paid based on the number of applications they produced. The FBI believed crimes were committed, but the Biden DOJ slow-walked and suppressed the case.
Today at 9:40 p.m. ET, U.S. Central Command (CENTCOM) completed its latest major wave of strikes against Iran.
U.S. forces, including fighter jets, aerial drones, and warships, launched precision munitions that hit dozens of Iranian military targets such as coastal surveillance and air defense sites, military logistics infrastructure, and maritime capabilities. This was the sixth consecutive night of U.S. strikes against Iran.
At the Commander in Chief’s direction, CENTCOM is further degrading Iranian military capabilities and holding Iran accountable for recent attacks on commercial shipping.
More than 50,000 U.S. service members are operating across the Middle East and remain vigilant, lethal, and ready.
“U.S. forces resumed the naval blockade against vessels transiting to and from Iranian ports and coastal areas today [July 14] at 4 p.m. ET,” the command posted to social media on Tuesday.
“There are currently more than 20 U.S. Navy warships and hundreds of military aircraft operating across the Middle East. American forces remain vigilant, lethal, and ready,” the statement continued.
Secretary of State Marco Rubio has requested that senior officials from more than 60 countries convene in Washington next Thursday to discuss the alarming rise of transnational far-left terrorism, according to a Washington Post report.
Snip.
The initiative is intended to expand intelligence sharing, law-enforcement cooperation and potential terrorist designations targeting militant groups with alleged ties to Antifa.
Administration officials have discussed whether foreign-terrorism links could unlock broader investigative and surveillance powers against US-based far-left revolutionaries that are a part of subversion networks.
The problem is that countries have been addressing far-left revolutionaries as a domestic threat, but in fact it’s transnational.
State Department spokesman Tommy Pigott said the upcoming event is in response to the rise of the radical left. He said far-left terrorism is “an old threat re-emerging with strong transnational links and new convergences.”
“Because this threat has not been adequately addressed in the past, each engagement, designation, or security assistance program creates a compounding effect supporting countermeasures at home and abroad,” Pigott said in a statement.
In November, the State Department designated four European far-left groups as foreign terrorist organizations and directed agencies to investigate networks accused of fomenting political violence. One of the militant groups in Germany is called Antifa Ost. Two more were in Greece and one in Italy.
During the Antifa roundtable at the White House last October, Seamus Bruner, Director of Research at the Government Accountability Institute, briefed the president and his cabinet on a complex network of dark-money NGOs and activist groups fueling unrest nationwide via the permanent protest-industrial complex.
“We have identified dozens of radical organizations, not just the decentralized Antifa organizations, but dozens of radical organizations that have received more than $100 million from the Riot Inc investors,” Bruner told Trump.
Jihadists attacks and plots in the United States are down by two-thirds since ISIS’s peak. The number of people killed by jihadist terrorism in Europe dropped by roughly 97 percent from the year 2015 to the year 2024. In other words, to a very great extent, our counterterrorism strategy has worked. The threat has not disappeared, of course. It will continue to exist, particularly so long as we tolerate immigration systems that imports these threats directly into our respective homelands. But this threat has been severely diminished. The world looks very different today because of it.
For far too long, however, our counterterrorism doctrine has had a blind spot – a blind spot when it comes to extremist violence from the political left. Even today, the very idea that far-left terrorism could be a serious threat is treated as a right-wing fever dream, or worse, as a dangerous fascist conspiracy. It’s treated this way by many in the press, by many in academia and our universities, and by many of our legacy institutions. You will no doubt see the dogma rear its head in the coverage of this very conference. In spite of the clear and the undeniable reality, in spite of the objective numbers and statistics, in spite of the fact that in this room today there are representatives from across the political spectrum, we will hear this organized – that this kind of organized violence and terror will be dismissed. It will be dismissed as a partisan fiction.
A whole industry grew up in our countries around the study of extremism. We have think tanks and fellowships and journals and consultancies, with the unspoken understanding among them that the only kind of political violence that was a true threat to our system – I’m sorry – that only one kind of political violence was a true threat to the system. A bomb planted by a neo-Nazi group was a nefarious and murderous act of evil. It is. But a bomb planted by a Marxist revolutionary – well, that’s just merely a tragic excess of idealism. Perhaps its means were misplaced or overzealous, but its ends were virtuous and just. That’s the implication of how they treat it.
For years, this extraordinary ideological prejudice was embedded in the way we talked about political violence and extremism. It was repeated again and again, until it was accepted as the neutral and objective baseline, so entrenched – so entrenched in the mainstream conventional wisdom that it came to be regarded as an apolitical fact. It is the reason why, here in my country, so many people in positions of power have repeatedly dismissed acts of violence and even terrorism as legitimate forms of political expression so long as they served a left-wing cause.
It is why during those George Floyd – so-called George Floyd – riots in the summer of 2020, as criminals and extremists burned and looted their way through American great – America’s great cities and nearly brought the country to its knees, city governments all across the country simply refused to prosecute the people conducting these acts of violence and terror. It is the reason for the now infamous image – and you all recall this – of a news anchor from a very prominent agency – a news anchor standing in a neighborhood consumed in flames; meanwhile the chyron on the bottom read that the protests were mostly peaceful. This was something worse than a double standard. Left-wing violence was not just excused; it was treated as sacrosanct, a protected class unto itself. That era has to end.
“Move over, Somali Learing Centers! Nick Shirley and Dr. Oz just visited Asian “adult daycares” and found a whole bunch of fraud.” “We uncovered over $190,000,000 in fraud as these fraudsters use the elderly and needy to commit fraud through adult and personal home care scams in NYC. Your tax dollars are paying for elderly Koreans and Chinese to play ping pong and do tai chi, while the fraudsters give $ kickbacks to those who enroll.”
“I Watched the DSA Go Crazy. The Democrats May Be Next. The anti-democratic far Left is using the same strategy that helped them capture the Democratic Socialists of America.”
How worried should Democrats be about the Democratic Socialists of America? In the wake of a series of DSA victories in New York City, Jonathan Chait raised the alarm in The Atlantic, writing that as the group has risen in power, it has also grown “more hostile to the [Democratic] party, more illiberal, and more dogmatic.” Long-time DSA members, including former staff member and thought leader David Duhalde and socialist magazine publisher Nathan J. Robinson, pushed back, dismissing Chait as someone who doesn’t know or understand the DSA.
Well, I know the DSA, and as someone who was a member and served in local leadership, I can say that Chait has it right: today’s DSA is not a harmless organization. It includes disciplined, radicalized networks that have methodically expanded their power over the last decade in pursuit of extremist goals.
As the Democratic Party grapples with the DSA’s growing influence and extremism, it would do well to recognize that the same dynamic underway now—first accommodation, then capture, then surrender to insurgent radicals—already played out on a smaller scale within the DSA itself. The only defense is to out-organize it.
For decades, the DSA was mostly composed of a cohort of aging Boomers left over from its founding in 1982. It prioritized open debate and political tolerance. Following in the tradition of founder Michael Harrington, members viewed the DSA not as a revolutionary vanguard but as a reformist bridge to mainstream labor-liberalism, and they prioritized parliamentary process and pluralism.
But in the mid-2010s, the character of the organization began to change. I was in Boston at the time and witnessed the last days of the “old” DSA. New, younger members began to enter the organization, while Senator Bernie Sanders and the socialist magazine Jacobin grew their followings.
As the DSA’s cultural power expanded and it began to amass electoral victories, more leftists of varying extremist commitments were drawn in. This was an explicit strategy called “the big tent,” advanced by the then-DSA Jacobin Left. In August 2025, DSA delegates voted to remove a constitutional provision barring Leninists from entry. The provision was already a dead letter.
The old DSA’s high-mindedness became its fatal weakness. Veteran members assumed the younger generation played by the same rules of persuasion, but the newcomers’ goal was not to win arguments—it was to transform the institution and its politics.
As the organization grew, it began to profess more extreme ideas—and demand that its members do the same. First there were the purity tests of Black Lives Matter and BDS, then apologia for Putin’s invasion of Ukraine and support for Hamas and its atrocities.
The new DSA—with the help of hype-man Hasan Piker—advanced these agendas with what American labor leader Walter Reuther called “the Communists’ highly developed technique of name-calling and character assassination.” The Harringtonites fought back, but their efforts came far too late, and many prominent members of the older generation eventually left.
In a sense Jake Altman is wrong. The Democrat Party has largely already been captured by allied forces under the guise of “social justice” at the same time the commies were taking over the DSA, and were able to do it for much the same reasons: “no enemies on the left”, along with a heaping bowlful of white guilt.
A coalition of state financial officers said it uncovered roughly $225 million in alleged fraud across America’s schools over the past six years, identifying nearly 90 cases involving embezzlement, fake invoices, inflated enrollment, bid-rigging and kickbacks.
In a new report obtained exclusively by Fox News Digital, the State Financial Officers Foundation (SFOF) and Open the Books analyzed every Education Department Office of Inspector General (OIG) Semiannual Report to Congress issued between Oct. 1, 2019, and March 31, 2026, revealing alleged fraud across 24 states and Puerto Rico.
Some other examples snipped.
In Texas, former Houston Independent School District Chief Operating Officer Brian Busby and contractor Anthony Hutchison allegedly orchestrated a fraud scheme of more than $6 million, involving school construction and grounds maintenance contracts in exchange for cash bribes and hundreds of thousands of dollars in home renovations.
A federal jury found Busby and Hutchison guilty of conspiracy, bribery, filing false tax returns, and witness tampering, with Hutchison also convicted on seven wire fraud counts, according to the U.S. Attorney’s Office for the Southern District of Texas.
“Bureaucratic bloat, insider dealing, and poor oversight prompted Governor Abbott and the Texas Education Agency to intervene in HISD and appoint new leadership,” HISD Superintendent Mike Miles told Fox News Digital. “School funding was being squandered, the quality of schools had deteriorated, and the majority of students’ education was being neglected. That is no longer the case. Since June 2023, we have made it a priority to eliminate waste and most importantly, now every decision we make is focused on closing student achievement gaps, preparing students for the future, and supporting teachers.”
More proof that Democrats in office are scumbags all the way down. “Swalwell pal Sen. Ruben Gallego had sexual relationships with two House staffers, sources reveal to The Post.”
Arizona Democratic Sen. Ruben Gallego, a potential 2028 presidential candidate, engaged in sexual relationships with at least two House staffers and his “very flirtatious” habits with others may come back to haunt him, The Post has learned.
The 46-year-old lawmaker admitted to the two relationships — both with aides to Texas Democrats — to one source while a second person said they had recently learned of the romantic entanglements.
A third source confirmed one of the dalliances, both of which are said to have been consensual and occurred during Gallego’s decade representing Phoenix in the House.
So he’s just an adulterer, not a rapist (as far as we know). Does this put him in the top half of senate Democrats for morality? (Hat tip: Instapundit.)
“Marine Drones Hit Two Russian Tankers: Magyar Hit 11 More Ships.” I’ve arranged these from most recent to least recent, which is all of five days ago.
“American Marine Drone Hits Iranian Submarine Repair Facility & Submarine at Bandar Abbas.” The drone used to attack the facility was the Corsair, manufactured by Austin company Saronic. Speaking of which:
“Sea Drone Company Saronic Announces $3.2 Billion Texas Shipyard. The company says the project is aimed at strengthening U.S. shipbuilding as autonomous vessels play an increasingly prominent role in modern warfare.”
Austin-based defense technology company Saronic, known for building autonomous watercraft, announced plans to invest more than $3.2 billion in a new shipyard at the Port of Brownsville that is expected to create 10,000 jobs.
Gov. Greg Abbott joined Saronic CEO Dino Mavrookas Thursday at the company’s Austin headquarters to announce the project, known as Port Alpha.
The shipyard’s initial phase will occupy more than 800 acres, with the potential to expand to more than 4,000 acres. Saronic plans to break ground this year and begin producing ships in 2028.
“The initial phase of Port Alpha will more than double America’s shipbuilding capacity today and will make it the largest shipyard in the country,” said Mavrookas.
Port Alpha will be designed for advanced manufacturing, software-based production, and autonomous vessels.
Mavrookas framed the project as a response to the decline of American shipbuilding and the increasing maritime capabilities of China.
“Today, China is now outbuilding the United States in shipbuilding capacity 230 to one,” he said.
“A nation that cannot build ships cannot project power, cannot protect its supply chains, and cannot defend its interests,” Mavrookas added. “We are at that moment right now. Port Alpha is our answer.”
Saronic designs and manufactures autonomous vessels for the U.S. military, including the Corsair, Mirage, and Marauder.
This is good news for American drone manufacturing (and shipbuilding). However, on a personal level, I note that Saronic has had the same technical writing position open for most of this year. Indeed, I’ve applied for it multiple times when listed, but gotten no contacts save form replies. Maybe with all their new activity they’ll finally be hiring…
Former Obama staffer accused of stealing from colleagues to fund drug habit.
Adam Fetcher, 42, was let go from his role as Chief Communications Officer for the City of Minneapolis last week amid a police probe, The Minnesota Star Tribune reported.
According to the outlet, Fetcher, who earned $186,495 a year in his role, is accused of stealing cash and credit cards from three of his colleagues and racking up fraudulent charges in smoke shops.
Fetcher’s drug of choice was Kratom, “a substance which is used to manage opioid withdrawal.”
U.S. Rep. Chip Roy wants the Trump administration to crack down on legal immigration after last week’s U.S. Supreme Court decision thwarting a presidential executive order to address birthright citizenship.
In a letter to the Trump administration, Roy (R–Austin) said that while the administration works to secure the nation from illegal immigration, the current level of legal immigration should be reassessed to ensure that the “economic opportunities, cultural and social cohesion, or security” of American citizens is not negatively impacted.
Expressing concern about increasing pressure on housing, schools, and healthcare services, Roy wrote that the “American people deserve transparency so we can ensure our immigration system puts American workers, taxpayers, and communities first.”
According to the congressman, the U.S. takes in approximately one million legal immigrants each year because of the Immigration Act of 1990. This accounts for roughly 34 million immigrants over the last 35 years. He also explained that more than 10 million nonimmigrant visas are issued to visitors such as guest workers, foreign students, and tourists.
Roy went on to cite an analysis of last year’s Current Population Survey (CPS) by the Center for Immigration Studies, which highlighted legal and illegal immigrant totals of “53.3 million and 15.8 percent of the total U.S. population in January 2025.”
Ashrafuzzaman Khan, a former top official of the Islamic Circle of North America in Queens, New York, personally slaughtered seven university professors as the chief executioner of Jamaat-e-Islami’s Al Badr death squads during the 1971 Bangladesh massacre. Despite being convicted in absentia of war crimes, he helped build one of America’s largest Muslim organizations and continues to live freely in the United States.
Here’s a weird Texas crime story: “Lavaca County Justice of the Peace Commits Suicide Following Arrest for Compelling Prostitution, Sexual Assault. Travis Hill had been a fugitive since Monday, when he failed to appear for a pre-trial appointment.” Lavaca County is in south central Texas between Houston and Seguin on highway 90.
A Lavaca County justice of the peace who was arrested earlier this month on felony charges committed suicide on Thursday as law enforcement agents attempted to arrest him a second time.
Precinct 2 Justice of the Peace Travis Mitchell Hill was arrested July 11 on first- degree felony charges of compelling prostitution, second-degree sexual assault, and solicitation of prostitution, but reportedly had been released on bond.
Usually, compelling prostitution is upgraded to a first-degree felony when the victim is a minor.
The Lavaca County Sheriff’s Office was made aware of allegations against Hill six weeks ago, but since Hill was an elected official and a practicing criminal defense attorney, Lavaca County Attorney James Reeves recused himself and referred the case to the Texas Office of the Attorney General (OAG). The Texas Rangers were leading the investigation.
Hill did not appear for a pre-trial appointment Monday, when he was supposed to receive an ankle monitor. The U.S. Marshal’s Office was assisting local law enforcement with locating him on Thursday.
According to a statement issued by Reeves, Hill was located Thursday evening “at a remote location in Gonzales County, Texas. During law enforcement’s encounter with Mr. Hill, he committed suicide.” No other details were provided.
“Hill was appointed as justice of the peace in 2011 by the Lavaca County Commissioners Court. He had reportedly previously run as a Democrat for Lavaca County district clerk in the March 2011 primary, but switched to the Republican Party sometime later.” There are no more details about the charges against him online that I can find.
Follow-up: Remember the killing of Tory-turned-reform MP Ann Widdecombe in last week’s LinkSwarm? Turns out the suspect arrested is probably a commie. (Hat tip: Ed Driscoll at Instapundit.
“Houston Man Killed by ICE, Hailed as Father Chasing ‘American Dream,’ Had Meth in His Car.” That would be illegal alien Lorenzo Salgado Araujo, who tried to run over an ice agent in his truck.
Unexpected headlines: “A tech company is repurposing its sexbots into AI teachers’ aides and they’re already being used in at least one New York state school.”
As Flock cameras are installed across the nation, citizens are growing more concerned about the potential privacy violations posed by automatic license plate readers.
On Friday, U.S. Rep. Keith Self wrote on X that “[i]f transparency is now considered a threat, we’ve already drifted too far from the principles of a free Republic,” responding to an article about Flock’s CEO, who said that it is “terroristic” for the public to want to know where the company’s automatic license plate readers are being installed.
Flock cameras do not act like traditional license plate readers. Powered by AI, they capture details such as the make and model of a passing vehicle, as well as any unique or identifying features such as dents, scratches, stickers, and aftermarket parts.
The ALPRs also capture data on vehicles, regardless of whether they have been implicated in a crime. Police departments do not need a search warrant to access Flock data, heightening concerns about Fourth Amendment violations.
“TSMC posts record revenue in second quarter on AI demand.” “Revenue in the April-June period of this year came in at T$1.27 trillion ($39.62 billion), according to Reuters calculations, slightly above a T$1.264 trillion LSEG SmartEstimate drawn from 20 analysts.” (Hat tip: Stephen Green at Instapundit.)
We’re living in an Age of AI. Why was there a “Jazz Age”? Why did jazz create an “Age”? Why was there this period between the Great War and the Great Depression, where a new form of music was very important, and people around the world cared about it?
You can theorize about jazz. You can say that there were social reasons: that jazz was fun and new and sexy, and women wanted to wear short skirts and dance the Charleston.
Or you could say that jazz was infrastructural — that music from the town of New Orleans could be recorded, and exported, and transmitted on the radio. There were new forms of mass media, so it was easier to spread a viral fad, around the world. So, that somehow explains jazz.
Or you could say that jazz was political — that there was an oppressed class of black people living under apartheid, and jazz musicians and composers were making their voices heard.
Or you could say that the Great War had just ended, and it was followed by a plague of flu that killed even more people than the worst war in history. You might say that jazz was a method for musicians to rescue mankind by changing the subject. Jazz was strange and extreme, because it was denying and avoiding the trauma of a lost generation. With more trauma — depression and war — well on the way.
It’s pretty clear to me that the generation of AI — and it’s been going on for ten years, it’s a generation — has a lot of that unspoken Jazz Age anguish. It’s a vivid displacement activity for a lost and troubled era.
I’m a novelist, so I notice the peculiar emotional expressions here. I notice things like AI burnout, AI psychosis, unhealthy relations with imaginary boyfriends and girlfriends, AI fakes, stock market bubbles, and the fear of missing out. That stark fear. So much fear. The fear of missing that golden chance. Also, the fear that AI is real this time, and is really happening. The apocalyptic terror that AI will lead to the destruction of the world.
This is not the cyberpunk dystopian dark side of AI. This is the propulsive force of AI. It’s the restless and itchy drive that forces you to leave your apartment and rush downtown to the jazz club.
Why do you go? The jazz club is not a place for the angels. You might drink bootleg liquor there and become an alcoholic. Or you might get in a fight, or catch a venereal disease. There’s cocaine and marijuana there. Someone might mug you and take your purse or wallet. But also, in New York, Duke Ellington is playing! In Paris, Django Reinhart is playing! It may be a wild scene, but you’re crazy not to go!
This is the high summer of AI. The scene is red hot. I’ve been aware of AI for my entire, extensive lifetime, and it’s never been this technically intense and this deeply felt. Rational people, with education and money and power and experience, are cracking up in public. They’re losing their heads over it. Billionaires, captains of industry, politicians, military, spies. Worldwide. Old and young, men and women.
It’s a craze.
I’m very interested in it. I follow its every little up and down. It is so far out and science fictional that it might have been built just to entertain elderly cyberpunk writers. I do not invest in it. I’m not selling any of it to you. I don’t use it much personally. It isn’t changing my life — not much as yet. I’m not afraid of it. I don’t even think it will last. It’s defining an era, an era which is ten years old and counting, but something else will show up. AI is not a fraud, or pretense, or a fake. It’s a real and powerful technology and we’re never going back to the way things were. I recognize all that, but also, I take consolation in continuity.
A bunch of AI-related news has popped up this week, so let’s do a roundup.
Some AI companies are complaining that TSMC is killing the AI boom by not expanding rapidly enough:
Asianometry notes that TSMC’s caution at expanding is amply justified by the boom-and-bust nature of the semiconductor industry:
“I’m hearing many similar views in the Silicon Valley Borg that TSMC is the break or limiter on the AI boom, as if they’re the reason why we don’t have AGI yet. Because they didn’t and still don’t believe.”
“If we can ever say that a company that spent $41 billion on capital expenditure in 2025, with another $53 to $56 billion in 2026 planned, is sitting on its hands, doing nothing.”
“TSMC having 90% share of the AI chip market looks pretty unhealthy. That should go down and it will. Samsung seems to be doing well so far.”
“The cold, hard reality is that shortages are a fact of life in semiconductors, as are horrific gluts.”
“What we are flippantly labeling as TSMC we really mean is the AI supply chain. And that supply chain is as complicated as you can possibly imagine. Like an iceberg, it looks big enough on the surface of the water, but goes way far deeper underneath. TSMC has thousands of suppliers in two categories: Equipment like the famed ASML lithography tools and materials like photoresist, silicon wafers, acid etch gases and so on. These are not generalized tools and materials. They are not fungeible like AWS compute units.”
“And then there are the memory guys. You cannot ship an AI system without memory. DRAM and NAND. Nvidia’s AI chips use a special form of DRAM called high bandwidth memory, and they use quite a lot of it. The memory industry is just as consolidated as the logic industry, with the major players being Samsung, SK Hynix and Micron.”
“The chip guys are last to know when the party is getting started, but first they get batoned in the face when the police shut things down.”
He points out that semiconductor manufacturers have log supply chains. He uses a different metaphor (the beer distribution game, or a bullwhip), but back when I was working at Applied Materials, it was described as trains linked together with slinkys. First software takes off, then hardware gets yanked along, then the chip manufacturers get yanked, and then, finally, semiconductor equipment manufacturers get yanked into motion, and shortly after that happens, the bust hits the front of the train, and the trailing cars all crash into each other. It’s a regular boom/bust cycle.
“From 1961 to 2006, electronics consumption in the United States grew positively but with wild volatility swings between 0 to 20%. But for the semiconductor makers, that translates to swings anywhere from 20% to 40%. And for the equipment makers, it is amplified even more, plus or minus 60%. The whip hits particularly hard in the semiconductor industry because of the industry’s long lead times. It takes 4.5 months to fabricate and package a chip. It takes 18 months to 2 years to build a fab. Meaning from shovels down to producing chips, and it takes 12 to 18 months to produce and install something like an EUV machine into the fab. Another 6 months before that machine actually starts patterning wafers.”
“Long lead times mean having to make very long demand forecasts, which leads to extreme volatility swings during up and downturns even if those up or downturns are relatively small.” People forget that in 1998, during the time we now think of as the DotCom Boom, there was a small semiconductor downturn that had Applied Materials forcing employees to take unpaid leave.
“ASML just reported 2025 earnings, and we see the bullwhip in full effect. TSMC raised capital expenditure 35% but ASML announced €13.2 billion of net new bookings. Analysts had expected just €6.32 billion. This is because ASML collected orders not just from TSMC, but also Samsung, Intel and the memory guys. When it rains it pours, right? Again, this is why I fear that another AI foundry would not mean our compute shortage is solved, because ultimately, when those foundries start scaling their capacity, they all go to the same suppliers.”
He goes over how car manufacturers cancelled orders during Flu Manchu, and then scrambled when the economy took off afterwards. “TSMC was trying to discern between double booked orders and real demand, which is not an uncommon experience for them. Customers lie about their own demand all the time, or at least we can say that they are eternally optimistic. TSMC tried to respond in 2022. The Taiwanese giant poured $36 billion into capital expenditure. They went to their suppliers and pushed like no tomorrow.”
“It turned out those customers really were double booking orders and artificially inflating demand. When the macro environment turned in 2022, the automotive, smartphone, and PC chips that were so hot during the COVID era fell out of vogue and customers started cutting orders.”
“Meanwhile, deeper down in the supply chain, TSMC and the rest of the semiconductor industry were getting bullwhipped by COVID hangover. Utilization at TSMC’s multi-billion dollar N7 fabs crashed, Semi analysis wrote in April 2023. Now, Semi analysis data indicates that the 7nm utilization rates were below 70% in Q1. Furthermore, Q2 gets even worse with 7nm utilization rates falling to below 60%. This is primarily due to weakness in both smartphones and PCs, but there is a broader weakness in most segments. A fab’s break even utilization rates are about 60% to 70%. So those N7 Taichung fabs were taking financial losses potentially on the order of hundreds of millions, maybe even billions. The financial burdens of low utilization are another reason why I’m skeptical another AI foundry could have rushed into the AI chip fray to save the day.”
He says that Intel incurred losses during this period due to an unnecessary fab expansion, which is probably true, but that was a secondary factor next to their longer running problem of getting their process wrong.
“ChatGPT was released in November 2022, and that kicked off a massive increase in capex amongst the hyperscalers in particular, but it sure seems like TSMC didn’t buy the hype. That lack of increased investment earlier this decade is why there is a shortage today and is why TSMC has been a de facto break on the AI buildout/bubble.”
“I recall news in mid 2024 of TSMC struggling with CoWoS capacity bottlenecks and yield problems, including one design issue that caused cracks in the Nvidia chips packaging.” CoWoS is Chip on Wafer on Substrate, which involves fabbing an interposer as a substrate for faster connections between your processing chips and memory.
“I also recall news in late 2024 noting how the vendors in charge of making the server racks for Nvidia’s Blackwell servers struggled with overheating, liquid cooling leaks, software bugs, and connectivity issues. Such technical difficulties delayed server deployment until early to mid 2025, creating a weird situation for several months where TSMC was pumping out chips that just went into storage. So that gated things, because you don’t scale until you first fix the technical problems.”
Then there’s the power-scaling issue, which is a whole ‘nuther can of worms.
There’s a lot of talk about a SaaSpocalypse going on thanks to a new AI tool. (SaaS is “Software as a Service.” Instead of hosting your own payroll or sales-tracking or whatever servers, you hire a company that already has cloud software setup to do it and you just tie into that, which can considerably reduce startup costs. A whole lot of successful new tech companies over the last decade plus have been SaaS companies.)
The software sector was jolted overnight with what analysts are calling a “SaaSpocalypse” — a sudden and severe selloff triggered by new artificial intelligence tools unveiled by US AI startup Anthropic. The episode has sharpened investor fears that AI is no longer merely helping software companies but may now begin replacing them.
Anthropic has expanded its enterprise AI platform, Claude Cowork, by launching 11 new plugins aimed at automating a wide range of professional tasks. Claude Cowork is an agentic, no-code AI assistant built for corporate users, allowing companies to automate workflows without writing software. The new plugins are designed to handle tasks across legal, sales, marketing and data analysis functions. The most recent addition is Anthropic’s Claude Legal agent, which can perform routine legal work such as document and contract review, and compliance checks.
Anthropic has said that the tool does not provide legal advice and that all AI-generated outputs must be reviewed by licensed attorneys. Even so, the breadth of automation signals a step change in how much white-collar work AI systems can now perform.
Productivity — Manage tasks, calendars, daily workflows, and personal context
Enterprise search — Find information across your company’s tools and docs
Plugin Create/Customize — Create and customize new plugins from scratch
Sales — Research prospects, prep deals, and follow your sales process
Finance — Analyze financials, build models, and track key metrics
Data — Query, visualize, and interpret datasets
Legal — Review documents, flag risks, and track compliance
Marketing — Draft content, plan campaigns, and manage launches
Customer support — Triage issues, draft responses, and surface solutions
Product management — Write specs, prioritize roadmaps, and track progress
Biology research — Search literature, analyze results, and plan experiments
A lot of those are already automated elsewhere, but I suspect a lot accountants and paralegals just felt a goose strut across their grave. On the other hand, who is really going to turn over, say, Accounts Payable to an AI? One glitch, and your entire bank account is drained…
If it works (a big if, give so many AIs are prone to hallucinations), this is potentially good news for Anthropic and the companies using their tools, and bad for SaaS companies and the employees currently doing those jobs.
I note there’s no plugin for technical writing…yet.
And Google Cloud ended 2025 at an annual run rate of over $70 billion, representing a wide breadth of customers, driven by demand for AI products.
We’re seeing our AI investments and infrastructure drive revenue and growth across the board. To meet customer demand and capitalize on the growing opportunities we have ahead of us, our 2026 CapEx investments are anticipated to be in the range of $175 to $185 billion.”
Remember how Nvidia was going to invest $100 billion in OpenAI? Yeah, not so much.
In September 2025, Nvidia and OpenAI announced a letter of intent for Nvidia to invest up to $100 billion in OpenAI’s AI infrastructure. At the time, the companies said they expected to finalize details “in the coming weeks.” Five months later, no deal has closed, Nvidia’s CEO now says the $100 billion figure was “never a commitment,” and Reuters reports that OpenAI has been quietly seeking alternatives to Nvidia chips since last year.
Reuters also wrote that OpenAI is unsatisfied with the speed of some Nvidia chips for inference tasks, citing eight sources familiar with the matter. Inference is the process by which a trained AI model generates responses to user queries. According to the report, the issue became apparent in OpenAI’s Codex, an AI code-generation tool. OpenAI staff reportedly attributed some of Codex’s performance limitations to Nvidia’s GPU-based hardware.
After the Reuters story published and Nvidia’s stock price took a dive, Nvidia and OpenAI have tried to smooth things over publicly. OpenAI CEO Sam Altman posted on X: “We love working with NVIDIA and they make the best AI chips in the world. We hope to be a gigantic customer for a very long time. I don’t get where all this insanity is coming from.”
Microsoft’s Copilot chatbot has become central to its artificial-intelligence strategy as the company’s close partnership with OpenAI diminishes. But the effort to build it up as a ChatGPT alternative has been tough going.
Confusing brand positioning and interoperability problems have frustrated users, current and former employees who have worked on Microsoft’s AI products said.
Interoperability problems? With a Microsoft product?
Only a small proportion of subscribers to Microsoft’s enterprise suite use Copilot, and the percentage who favor it over Google’s Gemini or other tools has decreased in recent months, according to data reviewed by the Journal.
The stakes are high for Microsoft because Copilot is core to a push by Chief Executive Satya Nadella to transform Microsoft into an AI-first company, much as he transformed it into a cloud-first company around a decade ago. Copilot is one of Nadella’s top priorities, current and former executives said.
Microsoft shares tumbled after its earnings report last week sparked investor concern that growth in its most important unit, the Azure cloud-computing business, is slowing, and that its AI business is reliant on OpenAI while Copilot remains unproven. Shares fell nearly 3% Tuesday amid a slide in software stocks prompted by fresh concerns that AI tools will make enterprise subscriptions less necessary.
For other AI companies, we merely suspect they’re evil. For Microsoft (and Google), we already know they’re evil…
Hey, remember that whole “Sam Altman fired as CEO/reinstated as CEO of OpenAI” thing a couple of weeks ago? Here’s the archive story.
Sam Altman was reinstated late Tuesday as OpenAI’s chief executive, successfully reversing his ouster by the company’s board last week after a campaign waged by his allies, employees and investors, the company said.
The board would be remade without several members who had opposed Mr. Altman.
“We have reached an agreement in principle for Sam to return to OpenAI as CEO with a new initial board of Bret Taylor (Chair), Larry Summers, and Adam D’Angelo,” OpenAI said in a post to X, formerly known as Twitter. “We are collaborating to figure out the details. Thank you so much for your patience through this.”
The return of Mr. Altmanand the potential remaking of the board, capped a frenetic five days that upended OpenAI, the maker of the ChatGPT chatbot and one of the world’s highest-profile artificial intelligence companies.
“i love openai, and everything i’ve done over the past few days has been in service of keeping this team and its mission together,” Mr. Altman said in a post to X. “with the new board and w satya’s support, i’m looking forward to returning to openai, and building on our strong partnership with msft.”
OpenAI’s board surprised Mr. Altman and the company’s employees on Friday afternoon when it told him he was being pushed out. Greg Brockman, the company’s president who co-founded the company with Mr. Altman and others, resigned in protest.
The ouster kicked off efforts by Mr. Altman, 38, his allies in the tech industry and OpenAI’s employees to force the company’s board to bring him back. On Sunday evening, after a weekend of negotiations, the board said it was going to stick with its decision.
But in a head-spinning development just hours later, Microsoft, OpenAI’s largest investor, said that Mr. Altman, Mr. Brockman and others would be joining the company to start a new advanced artificial intelligence lab.
Nearly all of OpenAI’s more than 700 employees signed a letter telling the board they would walk out and follow Mr. Altman to Microsoft if he wasn’t reinstated, throwing the future of the start-up into jeopardy.
Four board members — Ilya Sutskever, an OpenAI founder; Adam D’Angelo, the chief executive of Quora; Helen Toner, a director of strategy at Georgetown’s Center for Security and Emerging Technology; and Tasha McCauley, an entrepreneur and computer scientist — had initially decided to push Mr. Altman out.
Well, here’s Patrick Boyle to provide some context:
A few takeaways:
There are two OpenAIs: “The non-profit OpenAI, Inc. registered in Delaware, and its for-profit subsidiary OpenAI Global, LLC.”
Musk was an early, and big, investor in the non-profit. “The founders pledged over one billion dollars to the venture, but actually only contributed around $130 million dollars- the majority of which came from Elon Musk.”
When he felt OpenAI was falling behind in 2018, he wanted to take over OpenAI himself. When the board rejected that, he resigned and took future pledged money with him, which blew a huge hole in their budget. (Whatever you think of Musk, I don’t think not being busy enough is his problem.)
Then came the for-profit doppelganger.
“The profits being capped at 100 times any investment.”
“The company explained this decision saying, ‘We need to invest billions of dollars in the coming years into large-scale cloud compute, attracting and retaining talented people, and building AI supercomputers.’ This transition from nonprofit to for-profit required OpenAI to balance its desire to make money with its stated commitment to ethical AI development.”
“This unconventional structure meant that Open AI had a board of directors, which in theory controls the entire corporate structure (which includes the charity and the capped profit company) – but which unlike other boards is not accountable to shareholders. The directors are in fact not allowed to own any stock to prevent a conflict of interest, because they are specifically not supposed to be aligned with shareholders.”
“The companies operating agreement – to investors – says – in writing: ‘It would be wise to view any investment in OpenAI in the spirit of a donation, with the understanding that it may be difficult to know what role money will play in a post-AGI world.’ Documents like this – that were written by an actual lawyer – highlight the problems we are starting to see from the combined popularity of science fiction in Silicon Valley and widespread microdosing of hallucinogens.”
“In the real world, where the role of money is reasonably well defined, Open AI is an unprofitable company and is expected to need to raise a lot more money over time from investors like Microsoft, to keep up with the high costs of building more sophisticated chatbots.”
“Despite this lack of profitability, the company is valued by investors at 86 billion dollars, and Bloomberg reported last weekend that ‘some investors were considering writing down the entire value of their OpenAI holdings to zero.'”
“Former colleagues would have an open door to follow and join a new AI unit, according to Microsoft chief Satya Nadella. As much of a win as this might have appeared for Microsoft (people were saying that they had managed to buy the hottest AI firm for zero), this might not have been the optimal outcome for them, as they would likely have had to deal with antitrust regulators and lawsuits from other Open AI investors.”
“The majority of Open AI’s 700 or so employees signed an open letter to the board demanding that the board resign and that they rehire Altman. The letter stated that the board had told the employee leadership team that allowing the company to be destroyed ‘would be consistent with the mission.’ The employees said that unless their demands were met, they would resign from Open AI and join the new subsidiary of Microsoft being headed up by Altman and Brockman.”
“You have to wonder what the employee contracts at Open AI look like that the entire staff could leave to work for a major investor in the company leaving Open Ai as an empty shell.”
“Typically, executives like Altman would have contracts that prevent them from hiring away key staff once they are no longer at the firm, and staff would have signed NDA’s preventing them from taking any technology with them.”
“The OpenAI story is a bit of a crazy one, where Microsoft and a number of other sophisticated investors agreed to put billions of dollars in, and employees got stock grants, all at an $86 billion valuation, without the contractual or fiduciary rights that investors might normally expect.”
Rival Anthropic has a similar structure.
“Bad corporate governance has been a growing issue particularly in Silicon Valley where companies like Google, Facebook and Snap structured their IPO’s such that founders were left with unchallenged power to do almost anything that they want.” Google and Facebook are garbage companies, but there are some scenarios where only founders can keep the company on a long-term vision rather than goosing quarterly profits (Jobs at Apple comes to mind).
Warren Buffet has a similar mechanism (A shares of stock only he controls) to keep control of Berkshire Hatheway.
“Since you are buying shares of companies in perpetuity, leadership who are not accountable to shareholders can take value destructive paths without answering to anyone. Meta’s Reality Labs division, which houses its efforts to build the metaverse, has lost around $46.5 billion dollars since 2019. Would Mark Zuckerberg have been able to waste this much money if he was accountable to investors?” I have a fairly strong suspicion that division is being used to hide all sorts of shenanigans.
Boyle is deeply suspicious of “stakeholder capitalism” as opposed to the old-fashioned, profit-maximizing kind.”
The thing missing from this summary, and all the coverage of the story I’ve seen, is why Altman was originally let go, and none of the principals involved seem to be talking about it…
