AI Hardware Dutch Disease

Imagine a factory that keeps producing the same part over and over, no matter what. That’s the core of Byrne Hobart’s 'AI Hardware Dutch Disease.' As AI chips become a hot market, countries rush to build more factories, but what happens when the demand plateaus? Hobart explains that the countries investing heavily in AI hardware might hit a point where new factories no longer add value — like overproducing in a shrinking market. This creates a classic ‘Dutch disease’ scenario, where a booming sector actually hampers broader economic growth. According to Hobart, the real risk isn’t just overinvestment — it's that those nations could get locked into a cycle of diminishing returns, all while resources get drained from other vital parts of their economies. And here's where it gets interesting: as the AI hardware push slows down, the countries that didn’t overcommit might be better positioned to adapt. That shift is subtle now, but it’s exactly the kind of signal that usually shapes the next big cycle.