The Rising Tide of Semiconductor Cost – It Isn't Transistory

- gate cost stopped dropping a decade ago due to the significantly increased costs of manufacturing to more and more complex 3D structures

- old chips used to be cheaper. As the new fabs took the margins, the fully depreciated 'hand me down' fabs ran as long as the market would take their chips, until they stopped working. Prices were low.

Now the 'hand me down' fabs are operating at 100% and the market still wants more. The old chips have higher yield, cost and reliability than the new ones. For automotive and IoT, that's the requirement. Meeting demand for the older chips requires significant investment in the 'hand me downs'.

Prices have to go up.

- TMSC has a stranglehold on all leading edge manufacturing. They are a price setter, not a price taker. They are clear that they will use this power, and are doing so.

TMSC has a 51% gross margin (!) and spends 52% of revenue on CAPEX (!!)

- context: semiconductors are 0.5% of global GDP