The Circuit Episode 2: The Business of Going Vertical
Dec 28, 2022
Ben Bajarin and Jay Goldberg dive into the rising trend of tech companies designing their own silicon. They explore how verticalization and standardization shifts impact competition and advantage. The duo discusses the slowdown of Moore's Law, highlighting the importance of custom chips and partnerships. They examine geopolitical influences on silicon ownership and the implications for the automotive industry. This insightful conversation reveals why owning silicon is crucial for controlling product roadmaps and customer relations.
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Episode notes
Consolidation Reopened The Case For In-House Chips
- Semiconductor consolidation made vertically integrated silicon economically feasible again for big companies.
- Fewer competitors and higher margins shifted incentives toward building custom chips for strategic advantage.
Not About Saving On Vendor Margins
- Building in-house chips rarely breaks even purely on component cost against vendors like Intel.
- Companies pursue custom silicon only when it delivers clear strategic product advantages consumers notice.
Moore's Law Slowdown Drives Customization
- Slowing Moore's Law pushes companies toward custom or semi-custom chips for performance gains.
- Specialized ASICs and accelerators become a primary lever as process-node progress decelerates.