TSMC, every mention
87 scenes (2021) · ← back to TSMC
tap a year for its mentions
every year 2021 anyone Ben Gilbert 203David Rosenthal 168John Bathgate 40Morris Chang 27Brinton Johns 13Ben Thompson 12Hamilton Helmer 4Steve Ballmer 2Jason Calacanis 1
Verbatim, from the transcripts: the passages where TSMC comes up
Complexity Investing & Semiconductors with NZS Capital (Extended Cut) · Acquired
- ▶ 0:50 Ben Gilbert On our TSMC episode, one of the 65 sources that we used was an episode of The Knowledge Project with Brinton Johns and John Bathgate.
- ▶ 1:16 Ben Gilbert And then, in a wild coincidence, the very next week, even before we shipped the TSMC episode, David and I were at Capital Camp and
- ▶ 1:38 Ben Gilbert So after, like, nerding out the whole rest of the event on TSMC, geopolitics, semis, we decided to have Brinton and John on Acquired, and on this episode, we actually didn't even get into Semiconductors for the first
- ▶ 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.
- ▶ 55:01 Ben Gilbert I think TSMC is like a top three position for you guys.
- ▶ 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.
- ▶ 1:02:17 David Rosenthal So you mentioned, John, that you own, uh, Cadence as a resilient position in the portfolio, having just done our TSMC episode and got a deep dive on the whole semi, you know, industry infrastructure.
- ▶ 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.
- ▶ 1:14:57 Ben Gilbert So on our episode, I think we did a little bit of a, uh, high gloss shine on the story and the current state of the market, especially with TSMC and Samsung.
- ▶ 1:15:10 Ben Gilbert Uh, TSMC is one to two years ahead.
- ▶ 1:15:17 Ben Gilbert That's TSMC and Samsung.
- ▶ 1:15:29 Brinton Johns Um, probably not super well understood, maybe like TSMC, and people know them for consumer electronics and phones, obviously, but they have 50% of the market share in DRAM and about a third of the market share in NAND.
- ▶ 1:17:21 Brinton Johns These, you know, system on chips that TSMC makes, and of course,
- ▶ 1:17:34 Brinton Johns So that's what TSMC is doing.
- ▶ 1:17:45 Brinton Johns Um, whereas TSMC doesn't have that conflict.
- ▶ 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…
- ▶ 1:19:45 David Rosenthal How do y'all think about, especially since TSMC is such a large position in the portfolio, um, how do you, how do you think about the, the geopolitical risk?
- ▶ 1:19:54 David Rosenthal Like, is that, uh, I mean, cause we did this whole big long episode and it kind of our, you know, the conclusion I think we came to was like, this company's amazing.
- ▶ 1:20:02 David Rosenthal There's like no fault we can find in this except that, you know, China might want to like, you know, take over the land that they sit on.
- ▶ 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…
- ▶ 1:22:13 Brinton Johns So like TSMC as a company is very valuable, but it's not super valuable without ASML and LAM and AMAT and KLA, right?
- ▶ 1:22:21 Brinton Johns So, um, when you think about the ecosystem of semiconductors and ASML, of course, is not valuable at all without TSMC and Samsung.
- ▶ 1:23:23 Brinton Johns Uh, we're building this fab, of course, in Arizona, this five nanometer TSMC fab, um, but it wouldn't be a stretch to think that they will be built again in Europe.
- ▶ 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?
- ▶ 1:26:21 Ben Gilbert so let's say, so TSMC is a resilience position.
- ▶ 1:28:20 Ben Gilbert Another thing that I think we kind of glazed over in our TSMC episode is the current state of Moore's law from a, from a, like, literal perspective, but then probably more interesting, the current state of the spirit of Moore's law.
- ▶ 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.
- ▶ 1:32:43 Ben Gilbert TSMC manufactures it.
- ▶ 1:32:45 Ben Gilbert They do all the packaging, so you have, like, metal, like, the bare metal to bare metal, um, uh, packaging of these things, so we don't need to run it through these buses that have low bandwidth to get information from one piece to another.
- ▶ 1:33:53 David Rosenthal Especially because TI, their main, uh, the, the, the core business is not the, like, the leading edge, uh, you know, uh, digital processors that TSMC is doing.
- ▶ 1:34:13 Brinton Johns We're fabbing at TSMC.
- ▶ 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.
- ▶ 1:36:17 David Rosenthal Real quick on, um, TSMC.
- ▶ 1:36:24 David Rosenthal My sense is that the open innovation platform that they've created is really important, and it's kind of the, what orchestrates all of what you're talking about here that, like, it really takes, it takes the village of the whole industry…
- ▶ 1:36:38 David Rosenthal Like, is, uh, uh, yeah, like, what, what is that, and how, how central is TSMC's open innovation platform to all of this?
- ▶ 1:36:56 Brinton Johns Um, the closest you get is kind of the TSMC open alliance, um, and there's pockets of it elsewhere.
- ▶ 1:37:21 Brinton Johns And TSMC said, oh wait, let's form an alliance with everyone, because this is really going to take everyone to keep driving this forward.
- ▶ 1:37:54 Ben Gilbert Like, they're even in the TSMC factory helping to assemble and operate these things.
- ▶ 1:37:58 Ben Gilbert And then I sort of was scratching my head thinking, well, could ASML just kind of, like, become TSMC?
- ▶ 1:38:38 Ben Gilbert And I'm like, well, shoot, why can't the Trumpf company just do what ASML does and then also do what TSMC does if they are the only ones in the world who can make 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.
- ▶ 1:45:42 Ben Gilbert Do you know, I, I couldn't find in our research, uh, how much of TSMC does the Taiwanese government currently own?
- ▶ 1:46:17 Brinton Johns Yeah, so it's, sometimes people ask, well, why can't just another company buy TSMC?
- ▶ 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.
- ▶ 1:48:29 Ben Gilbert I mean, it truly, uh, it, it, uh, you know, meets the Bill Gates line of the definition of a platform that they've created way more value for their customers and their ecosystem than they've
- ▶ 1:48:38 Ben Gilbert Captured for themselves.
- ▶ 1:51:31 Brinton Johns I think Morris Chang got this very early on, and that's what created TSMC into such a great company.
- ▶ 1:52:06 David Rosenthal For like, 50 years, like TSMC, you will destroy, you know, every Groupon out there.
- ▶ 1:52:15 Brinton Johns So the negative feedback loop for TSMC is, I'm gonna come in, I'm gonna take what used to be the special sauce of your business, and you're gonna trust me to do that.
Standard Oil Part II (Extended Cut) · Acquired
- ▶ 2:39 David Rosenthal Uh, the, uh, starting with the TSMC episode, we have just been on, I don't know what it is.
Standard Oil Part I · Acquired
- ▶ 42:18 Ben Gilbert Cause there's an interesting way that they are very much like TSMC that I want to talk about later.
- ▶ 54:58 Ben Gilbert So this, this notion of standard is almost like, kind of like the TSMC chip yield thing.
- ▶ 1:33:42 Ben Gilbert I just want to say, David, like, just like TSMC.
- ▶ 1:33:53 Ben Gilbert 50% are actually TSMC, manufactured by TSMC, and, like, we're all better for it as consumers, and I think it's just fascinating, this notion of, like, we're gonna keep lowering prices, the product's gonna keep getting better, and at the…
- ▶ 2:13:45 Ben Gilbert Like we talked a lot on the TSMC episode about these massive fixed costs.
- ▶ 2:13:50 Ben Gilbert I mean, they're investing a hundred million dollars in fabs over the next three years.
- ▶ 2:14:12 David Rosenthal There's the TSMC payoff.