Opinion
Bathgate: TSMC surpassed Intel because vertical integration forced impossible multi-front technological battles
“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?”
Insight
Bathgate: Escalating Moore's Law complexity favors horizontal semis over vertical integration
“The needs of Moore's law are just so difficult that like, it's hard enough to just do one of these things well and doing multiple of them well makes it makes it harder.”
Prediction Not checkable as stated
Bathgate: A TSMC fab shutdown sets Western tech progress back five years
“If for some reason, you know, China moved to seize Taiwan or however, you know, it went into play and all of a sudden TSMC's fabs were shut down, then you really, the Western world would be, you know, set back at least five years, if not 10, just in terms of l…”
Insight
Bathgate: Investors should avoid extractive moats reliant on price-hiking lock-in
“One of the things that we're careful about is like looking for companies where, you know, part of their moat is kind of you know, inserting themselves into the value chain or into their you know, their customers, you know, share of wallet basically, where they…”
Assertion Supported
Bathgate: Halving Apple App Store take rate costs 5% of gross profit
“What's the gross profit impact if they cut their app store you know, take rate from 30% to 15%, you know, across The board. What is that like? Five percent of gross profits. It's like meaningless to them and it would create so much value for all the, and there…”
Insight
Bathgate: TSMC keeps margins below its customers to prioritize long-term platform value
“TSMC has lower margins than most of their gross margins than most of their customers. And so at any point they could probably take the margins from 50% to 60% and say, Hey, I'm obviously have a monopoly in this market, but the way, you know, Morris Chang archi…”
Prediction Not checkable as stated
Bathgate: Moore's Law will continue spiritually for 10 to 15 years
“I think just like for the spirit of Moore's law, we still have, we have visibility probably for the next. 10 to 15 years.”
Disclosure
Bathgate: NZS targets a 30% hit rate on optionality investments
“What we're really playing for in the optionality, half the portfolio is asymmetry. And really it's not about batting average. Like it's okay if we're only right. 30% of the time, which is not intuitive at all for public markets investors.”
Opinion
Bathgate: Cadence is taking digital EDA market share from Synopsys
“We do think they're taking market share, especially in digital markets, like where they would be selling to an Intel or an Apple or an Nvidia. We think they're the share gainer, but both companies, it's like an extremely high quality duopoly.”
Assertion Supported
Bathgate: TSMC manufactures a quarter of the world's digital chips
“TSMC fabs a quarter of the digital chips made in the world right now.”
Opinion
Bathgate: Nvidia has one of the world's best business models
“NVIDIA has got close to 70% gross margins and like, you know, low forties operating margins. I did really with very little cyclicality because TSMC offloaded all that cyclicality. Right. So it is just like one of the best business models besides I would say en…”
Assertion Partly supported
Bathgate: Intel, TSMC, and Samsung bought 25% of ASML to fund EUV
“Intel and TSMC and Samsung partnered and actually bought 25% of ASML to inject capital into ASML to develop EUV systems.”
Disclosure
Bathgate: NZS Capital holds Texas Instruments for its decentralized culture
“Some companies in the portfolio we admire that, that do that would be someone like Texas Instruments where they have a really decentralized Culture and they actually push responsibility and decision-making down into kind of the deeper parts of the organization…”
Disclosure
NZS Capital: Microsoft and TSMC anchor resilient portfolio with ~10% turnover
“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 looking for like value stocks or kind of like cheap companies. We're looking for companies that are healthy growers that we…”
Disclosure
Bathgate: NZS Capital holds roughly one-third of its portfolio in semiconductors
“We have about a third of the portfolio in, in semis.”
Assertion Supported
Bathgate: Cree controls two-thirds of the silicon carbide substrate market
“Cree is the one company that has two thirds of the market for the substrate itself.”
Disclosure
Bathgate: TSMC never exceeds a 10% portfolio position due to geopolitical risk
“I mean, I guess it'll never be our, like, a 10% position for that reason as there is always this risk”
Assertion Supported
Bathgate: Zeiss makes the most uniform lenses in history
“ASML's partnership with Zeiss, the lens company is also like really special. And I guess like Trump and Zeiss could try to partner to, I don't think they have any ambitions to do this, but they could try to partner together to kind of circumvent ASML. But like…”
Assertion Partly supported
ASML took nine years between first EUV shipment and high-volume production
“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 high volume manufacturing on EUV until 2019. So they had, like, almost a decade of …”
