TSMC, every mention

Complexity Investing & Semiconductors with NZS Capital (Extended Cut) · Acquired Nov 3, 2021 · 40 mentions

• ▶ 17:32 John Bathgate Um, and so this would be a company like companies we own in the head of the portfolio, be someone like a Microsoft or a TSMC where we're not, we're not looking for like value stocks or kind of like cheap companies.
• ▶ 18:05 John Bathgate Um, I mean, just scale like TSMC, which we can talk about in more details, just like a classic scale company where, um, you know, we, we talk about power laws in our, our investing framework and kind of like,
• ▶ 18:15 John Bathgate You know, pockets of industries where one company can take 90 to 95% of the profits in a given industry, and TSMC is a great example of that.
• ▶ 18:21 John Bathgate And then you, exactly the way you guys laid it out so well on your episode on TSMC is you really get the flywheel going, right?
• ▶ 22:36 John Bathgate Like again, back to the TSMC example, cause you guys covered it so well, like TSMC has lower margins than most of their gross margins than most of their customers.
• ▶ 57:24 John Bathgate TSMC is a resilient position.
• ▶ 57:26 John Bathgate And then, um, kind of the broader ecosystem, like cadence design systems, which you guys brought up in the TSMC episode.
• ▶ 1:03:24 John Bathgate Someone from TSMC, and someone from Arm, and then someone from either Cadence or Synopsys.
• ▶ 1:03:32 John Bathgate And, um, it was just kind of like this, like, well, we, we love TSMC, and we love Arm, so it's like, let's do some work on Cadence, you know.
• ▶ 1:18:16 John Bathgate Intel has to fight TSMC on process technology, which, like, in itself is one of the hardest things, you know, any technology companies had to do over the last 20 years, and that's why Intel has been surpassed by TSMC, right?
• ▶ 1:18:26 John Bathgate But they also have to fight AMD, um, in their core, kind of, like, chip design market, where AMD, enabled by TSMC, is, um, innovating, you know, faster than they have in the last 20 years, and, and, like, really delighting customers and,…
• ▶ 1:19:04 John Bathgate So I, I generally, I think Britain's point on, on just like the business model difference between Samsung and TSMC is so,
• ▶ 1:19:09 John Bathgate Spot on because I mean, TSMC is like the neutral party that will never ever compete with their customers.
• ▶ 1:19:14 John Bathgate And if you think about the amount of trust that like a company has to put in TSMC because they're betting their entire company on TSMC's ability to make this chip for them and to have capacity for them when they need it.
• ▶ 1:19:24 John Bathgate Um, just like the amount of like trust, and this has kind of been Morris, you know, Chang's hallmark since he founded TSMC, that that's just something that Samsung can't quite offer because they, um, they just have a different business…
• ▶ 1:20:12 John Bathgate Yeah, even on TSMC's last earnings call, someone asked them, like, what they thought about Taiwan's sovereignty, and I'm just like, what a world we live in that, like, that's an open question that an analyst can ask on an earnings call.
• ▶ 1:20:28 John Bathgate I think we're, we, we spend a lot of time thinking about just the importance of TSMC to the world, and I'm not, I do think TSMC is top five most important technology platforms to the world.
• ▶ 1:20:37 John Bathgate Like, I think TSMC is more important than Apple.
• ▶ 1:20:42 John Bathgate I actually think it would be painful for everyone that, you know, loves iMessage and FaceTime, but like, it really would not be as big of a deal versus if, if for some reason, you know, China moved to, um, to seize Taiwan or however, you…
• ▶ 1:21:12 John Bathgate If you think, you know, shortages kind of from the way that auto, auto guys manage their inventory, um, and kind of just like the classic post recession, semiconductor shortages you always get, um, you go from there to, um, you know, what…
• ▶ 1:21:35 John Bathgate Then that brings you to the logical conclusion of, you know, hopefully, um, the US and kind of the West would, would move to protect TSMC at all costs, or at least get the people out of there.
• ▶ 1:21:44 John Bathgate We were, I mean, I guess I shouldn't joke about it, but it wouldn't be totally dissimilar to what's happening in Afghanistan, where I think you would just airlift as many TSMC folks out of there as possible in a short period of time, but…
• ▶ 1:25:29 John Bathgate So I guess, like, the full circle question or answer to your question on, like, how we even incorporate the geopolitical risk on, on TSMC is, I mean, I guess it'll never be our, like, a 10% position for, for that reason, um, as there is…
• ▶ 1:25:59 John Bathgate It's not just TSMC.
• ▶ 1:26:11 John Bathgate And so I, I kind of say like at that point, you know, the performance of our TSMC, um, common stock is probably not my, uh, my biggest concern that day, you know?
• ▶ 1:29:13 John Bathgate And so, I mean, one, one thing that you guys covered well, um, in the TSMC episode is, is the, um, implementation of EUV systems, um, from, from ASML.
• ▶ 1:34:55 John Bathgate I did really with, with very little cyclicality because TSMC offloaded all that cyclicality.
• ▶ 1:35:07 John Bathgate And so TSMC is the enabler of that, but I think Britain's point is spot on.
• ▶ 1:36:08 John Bathgate And then I think TSMC sitting in the middle of it will obviously do very well because they, um, you know, they're, they're driving a lot of the innovation also and, and obviously are the key partner for a lot of this.
• ▶ 1:39:12 John Bathgate You know, drops of molten tin, the whole spiel from ASML, which Ben, by the way, you did a very good job on the, uh, on the TCC episode.
• ▶ 1:40:07 John Bathgate With one of the things that's unique about ASML is, you know, they shipped the first EUV tool in 2010 to TSMC, and EUV didn't even really start high volume, and this was after, you know, a decade of R&D already, but then they didn't start…
• ▶ 1:40:21 John Bathgate So they had, like, almost a decade of learnings in TSMC's fabs on, like, how to get these things to actually work, how to get the, um, you know, the throughput to levels where the economics actually makes sense.
• ▶ 1:40:42 John Bathgate And so TSMC lived through 10 of the, or ASML lived through 10 of those, um, with all the, the, um, feedback, not just from, um, TSMC, but from all their ecosystem partners, right?
• ▶ 1:44:27 John Bathgate And so I think TSMC and Samsung and Intel kind of looked around and realized like we're betting the future of Moore's law on this one company, ASML, which at the time was like kind of a sleepy Dutch company that would have like a twenty…
• ▶ 1:44:41 John Bathgate Unique is that, um, Intel and TSMC and Samsung partnered and actually bought 25% of ASML to inject capital into ASML to develop EUV systems.
• ▶ 1:46:44 John Bathgate I think one of the things that's so cool about TSMC is if you just look at all the value they created, like NVIDIA is a, you know, half a trillion dollar company, and then kind of like add up their next few biggest customers like Qualcomm…
• ▶ 1:46:57 John Bathgate And then I was trying to think of like their aggregate value creation.
• ▶ 1:47:15 John Bathgate And so if you guys know that off the top of your head, that'd be my, my guess for kind of like Apple's contribution to the TSMC value creation for the world.
• ▶ 1:48:16 John Bathgate Like the, you know, Apple's contribution is, you know, another half trillion dollars to the TSMC value creation story, but you get the broader point, right?
• ▶ 1:48:22 John Bathgate It's just, it's, it's like trillions of dollars of market cap that TSMC has created for their, um, their partners, which I think is just so cool.