China's most famous chili-sauce maker put AI cameras on its line: more than 600 pepper sorters before, 48 kept for the final checks. So who actually pays the bill for AI?
Recorded at Zurich airport, just before the flight to China. The show keeps going, and the next ten days get a bit more China-heavy.
In this episode:
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Google borrows to build AI (
02:11) โ Alphabet: $127.6 billion in sales in three months and Google Cloud up 103%, but $51.4 billion of capex (a year ago: $24 billion) and free cash flow of minus $9.1 billion. Paid for with about $12.4 billion of new shares, bonds, and zero buybacks, while the Fed keeps rates high. Like a 200-year-old family firm that always paid cash and suddenly takes loans.
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AI is eating the world's memory chips (
06:20) โ SK hynix: more than 100 trillion won in one quarter (roughly $78 billion) and an 80% operating margin, up from 47% a year ago. The memory crunch runs until 2030, and new phone models are already about 25% more expensive this year. Jun Song on X: "Hardware is as cheap today as it is going to get." Teng Yan pushes back: not all of "sold out through 2029" is signed.
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China: 600 chili sorters, now 48 (
10:42) โ Lao Gan Ma, "Old Godmother", China's best-known chili crisp: a camera checks each pepper in 0.3 seconds and an air jet blows the bad ones into a bin. The story was the number two trend on Weibo on 13 October; the company denies layoffs. Malcolm's point: on a mass-production line you don't save 5 or 10%, you save 90% of the people.
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The thread (
00:07) โ Google pays with borrowed money, you pay with pricier phones and laptops, and people on the line pay with their jobs.
Malcolm's advice: if your company needs laptops or phones next year, buy them now. Memory won't get cheaper before 2030.
Corrections to the recording:
โข The chili company's chief quality officer is Li Xin. Per Yicai Global, they once had more than 600 sorters, and 48 were kept for a final round of checks.
โข "25% more expensive" is Counterpoint's figure for new phone models this year (via Rest of World), not a forecast for laptops next year.
Sources: Alphabet Q3 2026 results, TechCrunch, The Register, Rest of World (Counterpoint), Yicai Global, Jiemian News (36Kr), X (Jun Song, Teng Yan).
๐ฑ Ping Malcolm on WhatsApp/Telegram/Signal: +43 676 6144 904
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