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Comment by MrBuddyCasino | Hacker News Reader

Manufacturing costs force them to go down the chiplet path. Its actually impressive they can remain competitive at all given TSMCs margin of 67%. [0] If Intel Foundry manages to keep up with TSMC, thats a lot of pricing power advantage over AMD. Or they could make lower-power CPUs that would be uneconomical for AMD.

[0] https://www.macrotrends.net/stocks/charts/TSM/taiwan-semicon...

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Intel can't figure out how to make the next generation of chips. They used to be able to innovate on a steady regular basis, but they're still trying to get 7nm right and they've been working on that for many years while TSMC is on to 3nm. Makes you wonder what happened to that company that they got so far behind.

Why is EBITDA margin better in this context than net margin? Wouldn’t manufacturing facilities have a ton of depreciation and amortization that should be incorporated into the costs?

Gross margin is the appropriate measure of per unit cost/profit. Yes, EBITDA is not a good measure at all (for part economics).

But don't forget that TSMC's margins for massive bulk purchasers like AMD will be lower than the average.

Yup, obviously they are aware of AMD competition and can adjust their margins accordingly.

Does TSMC even have non-bulk customers at 7nm/5nm/4nm? I would have thought the mask costs are so high that it isn't economical except for the biggest companies.

Cerebras has probably bought less than 100 7nm wafers, total. Though they may have gotten many more sales than the last I checked. Tesla Dojo is probably about the same. I've seen loads of random chips like that on 7nm. I guess it depends what you consider "bulk".

7nm yes, 5nm/4nm not as much, apple pretty much bought out the entirety of 3nm. 7nm is a relatively mature process at this point.

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