New York Fed President Williams: AI Equipment Supply Tightness May Last Over Two Years

New York Fed President John Williams stated that it may take more than two years for the supply of AI equipment to catch up with demand, potentially increasing inflationary pressures. In an interview, he noted that the construction of AI infrastructure is driving up the prices of chips and goods that use chips. Williams believes that supply and demand for AI may not balance out in the next two years, assuming that demand continues is a significant assumption. He reiterated that the Federal Reserve may need to raise interest rates once more to curb inflation, indicating that his view has not changed. Regarding the situation in 2027, he mentioned that further observation is needed and sees no reason to believe that more rate hikes will be necessary. Despite rising interest rates, he expects AI investment to remain strong, as investors are relatively insensitive to prices, believing that AI will lead to productivity gains and economic transformation. The shortage of AI equipment supply may impact Bitcoin miners, as they need to compete for chips and power equipment. IREN signed a new $2.8 billion AI cloud contract in July, while Bitcoin miners face substantial financing needs when advancing AI projects, with lenders becoming increasingly selective.

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