Stratechery Chips and China
Oct 25, 2022
Discover the impact of U.S. chip sanctions on Intel and the ripple effects on global semiconductor dynamics. Learn about the innovative PurePlay Foundry model from Taiwan's TSMC that's revolutionizing independent chip design. Delve into Intel's challenges and ASML's breakthroughs in lithography technology. Explore the competitive landscape of chip manufacturing and the geopolitical tensions influencing China's semiconductor ambitions. This is a fascinating exploration of tech, strategy, and global politics in the semiconductor realm.
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Intel's Integrated Model: A Double-Edged Sword
- Intel's integrated model, combining chip design and manufacturing, once yielded high margins.
- However, this approach made them less adaptable to industry changes compared to modular companies like TSMC.
TSMC's Depreciation Strategy
- TSMC's modular approach and fab depreciation strategy allowed them to maximize profits.
- Running older fabs for extended periods, even with lower chip prices, generated substantial returns.
TSMC's Origin Story
- TSMC's founder, Morris Chang, recognized Taiwan's strength in manufacturing, not design.
- This led to the "pure-play foundry" model, enabling independent chip designers to thrive.