That assumes that supply production means can scale up instantly. Fabs for high end chips don't and usually take years from foundations being laid to First chip out of the production line.

In the interim, yeah, they will force prices up.

Additionally those fabs cost billions. Given the lead time I mentioned a lot of companies won't start building them right away since the risk of demand going away is high and the ROI in those cases might become unreachable

Is there any reason to believe that this will happen? Prices of graphic cards only went down after the crypto boom went down again.

> You don't think that as prices go up, the supply might also go up, and the equilibrium price will be maintained?

This assumes infinite and uniformly distributed resources as well as no artificial factors such as lobbying, corruption, taxation or legislation which might favour one entity over the other.

The dream of free market exists only in a vacuum free from the constraints of reality.