![]() ![]() ![]() So what happened in 2018 that started turning that around? The decline from 2009 to 2018 is basically Intel ( INTC) dropping the ball, because they were the ones driving growth before that. The dashed line is at the 41.2% annualized growth implied by Moore’s Law. This actually held up past 1985 until 2009. Moore’s Law is not a law, but a prediction by one of Intel’s founders in 1975 that the transistor density on silicon chips would double every 2 years on average through 1985. Let’s start with ASML.ĪSML makes the extreme ultraviolet lithography, or EUV machine that saved Moore’s Law. We can’t talk about TSM without talking about their most important vendor, ASML ( ASML), and their most important customer, Apple. The chip shortage is located in the mid and lower end nodes, and you see how margins have risen for the latter two in that environment. UMC ( UMC) is another Taiwanese company that does mid and low level fabrication (and very well). In Q4, 50% of TSM’s revenue was from their two top end fabrication “nodes,” where the highest prices and margins are. What you see, roughly, are the three levels of the fab business. ![]() They dominate the top end, where the high margins are. All they do is take designs from other “fabless” chip companies like Apple ( AAPL), Qualcomm ( QCOM) and Nvidia ( NVDA), and turn them into chips. TSM is the largest and best semiconductor contract manufacturer, AKA “foundry” or “fab”. TSM had a surge at their earnings report two weeks ago, because the news was too good to ignore, but when there is a riptide, everyone is headed out to sea. The whole semi sector got rocked in January. Then I am frequently told that China will either invade Taiwan, or nationalize TSM’s factories on the mainland. I patiently explain that Taiwan is the Republic of China, not the People’s Republic. For about a year or more now, when I bring up TSM, I am often told that it is uninvestable because of US-China tensions. The reason is right there in the name: Taiwan Semiconductor. Since our October 2021 launch: Data by YCharts TSM ( NYSE: TSM) is in the ARM Portfolio at Long View Capital, and until January, it had been badly underperforming the rest of the portfolio and the semi index. Sundry Photography/iStock Editorial via Getty Images What Just Happened? ![]()
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