I suspected that something like this might happen, where the demand will outstrip the supply and squeeze small players out. I still think demand is in its infancy and that many of us will be forced to pay a lot more. Unless of course there are breakthroughs. At work I recently switched to non-reasoning models because I find I get more work done and the quality is good enough. The queue to use Sonnet 3.7 and 4.0 is too long. Maybe the tools will improve reduce token count, e.g. a token reducing step (and maybe this already exists).
Chips are also quite small, limited partly by the ability to cool them once they enter a computer and partly because a single defect often means the whole chip must be discarded (which means large chips generatel lower yields).
I suspect we will see much more development in all of these directions, with individual chips extending deeper into 3d and getting improved tolerance to defects allowing them to get larger, as well as with chiplet, die-2-die, stacking and similar methods of combining chips in a package continuing to move forward at a rapid pace.
I don't think we should expect foundry development to stagnate in the near future. If anything, as AI starts to be used in developing new chips, it may well accelerate.
TSMC has acquired a lead in this area through a number of different methods. One of the main things is that they focus deeply on manufacturing. Another is that they work 24 hours a day in R&D, running 3 shifts so they basically have the lights on all the time. And as mentioned above, the upfront costs are incredibly high with a fab costing on the order of 20+ billion dollars to construct.
Intel is attempting to catch up, but it will likely be another 3 to 5 years before they are able to do so. Honestly just having R&D up and going all the time is probably a huge advantage for TSMC and probably a big reason behind their success. Regardless, suffice to say basically all cutting edge product shipments would cease in a matter of months if TSMC fabs were destroyed.
What about Samsung? I thought they also made leading edge.
Having spent a couple of weeks on Claude Code recently, I arrived to the conclusion that the net value for me from agentic AI is actually negative.
I will give it another run in 6-8 months though.