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All5 min read

The five layers of the AI supply chain, explained simply

AI can feel like magic. It isn’t. It’s a supply chain — a stack of real, physical layers, each depending on the one below it. Here’s the whole thing in plain words.

1. Power

Electricity, grid connections and cooling. The foundation. Without it, nothing above runs.

2. Chips

The processors that do the thinking, and the memory that feeds them. This is where a lot of today’s scarcity lives.

3. Wiring

The cables, networks and parts that tie thousands of chips into one giant machine. A cluster is only as good as its connections.

4. Software

Training and running the models themselves. The part everyone talks about — but it sits on top of all the physical stuff.

5. Products

The apps and tools people actually use. Where all the cost and capability below finally show up.

Why the order matters

Whichever layer is tightest sets the pace for everything above it. Watch the stack, not just the headlines, and you can see where the real pressure — and the real money — is going.

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