Qualcomm has achieved significant technological breakthroughs in its chips this year, surpassing Apple in performance. However, Qualcomm chip prices will rise again, with the Snapdragon 8G4 reportedly costing up to 1700 yuan per unit, more expensive than a domestic mobile phone priced at a thousand yuan. This inevitably brings up old memories, such as the so-called "cabbage price" for chips touted by China's Steve Jobs, who claimed that chips would eventually be as cheap as sand, sold by weight.

Speaking of buying chips by weight, Russia cannot be overlooked. According to Russian data, 2,320 kilograms of chips were imported in 2023, at a price of $2,730 per kilogram. Even so, chips are far from being as cheap as sand. Currently, the market price of one ton of sand is less than 100 yuan, which translates to roughly 0.1 yuan per kilogram. Thus, the price of Russian imported chips is over 200,000 times more expensive than sand.

The theory of "cabbage price" for chips originated from the idea that profits could be made through services like the internet, rendering hardware like chips less valuable. However, over the years, significant changes have occurred in the global market, making chips increasingly important and driving up their prices drastically.

The rise of AI has propelled chips to unprecedented heights. NVIDIA, the king of AI chips, has risen with the popularity of AI, making its chips highly sought after globally. NVIDIA's market value has surpassed $3 trillion, making it the first chip company to rival internet giants in market value, highlighting the critical value of chips globally.

Qualcomm, with its monopoly advantage, has continuously raised prices. When it first entered the Chinese mobile phone market, its chips sold for around 300 yuan. Today, prices have more than quadrupled, demonstrating the aggressiveness of its price hikes. However, due to Chinese mobile phone companies' reliance on Qualcomm's chips and patents, they have no choice but to accept these price increases despite their grievances.

The rising cost of chip manufacturing is also contributing to the increase in chip prices. While 14-nanometer lithography machines once cost only tens of millions of dollars, 5-nanometer EUV lithography machines now cost twice as much at $120 million. The escalating costs of equipment have made it challenging for chip manufacturers, with TSMC opting not to use the more expensive 2-nanometer EUV lithography machines for 3-nanometer production, sticking instead with the first-generation EUV lithography machines for 2-nanometer production. However, this has led to lower yields and smaller performance gains for 3-nanometer chips compared to 5-nanometer chips.

Furthermore, as advanced processes develop, energy consumption in chip production continues to rise. TSMC's electricity consumption now accounts for 8% of Taiwan's power supply, and this is expected to increase by 50% to 12% when 2-nanometer production begins in 2025. The significant increase in energy consumption has also driven up chip manufacturing costs.

For Chinese companies, the inability to produce advanced chips domestically means heavy reliance on imports, leading to exorbitant prices for overseas chips. NVIDIA's H100 chip, for example, reportedly sold to China for 260,000 yuan, while the A100 chip fetched over 100,000 yuan. In other words, NVIDIA earns as much from selling a single chip as it would from selling a car, highlighting the exorbitant cost of chips.

However, once Chinese companies solve the problem of chip availability, prices for overseas chips plummet. For instance, the availability of domestically produced analog chips forced Texas Instruments, a leading US analog chip manufacturer, to slash prices by 90%. Nevertheless, these chips are still more expensive than their domestic counterparts. The high prices of overseas chips can be attributed to both rising costs and their irreplaceable nature, giving suppliers leverage to charge premium prices.

While mass production of domestic chips has significantly reduced prices, they are still far from achieving the so-called "cabbage price" touted by China's Steve Jobs. This indicates that his claim was perhaps a mere jest or a strategic misdirection driven by personal interests. Chips are becoming increasingly important, and under such circumstances, it is inevitable that chip prices will continue to rise. The limited number of countries capable of producing chips globally underscores the high difficulty and value of chip manufacturing, making them inherently more expensive than sand.