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It’s about demand isn’t it? TSMC have red hot demand, it’s not hard to understand their urgency in setting up new fabs, wherever they may be. Intel don’t have the same incentive - their incentive is to take the money (because, why wouldn’t you), build newer fabs and hope for some breakthrough in demand. The urgency is not there: being complete before there is demand could be detrimental

>It’s about demand isn’t it?

Yes. There used to be a saying the most expensive Fab ( or factory ) isn't the most advance Fab, but an empty Fab.

You cant built without first ensuring you can fill it, you cant fill it without first ensuring you can deliver. And Intel has failed to deliver twice with their custom foundry. Both times with Nokia and Ericsson. How the two fall for it twice is completely beyond me, but then Intel are known to have very good sales teams.

Intel will need another Apple moment that has huge demand, little margin, but willing to pay up front. On the assumption that Intel is even price competitive. The Apple modem may be it. But given the current situation with Intel as they want to lower Capital spending I am not even sure if betting on Intel is a risk Apple is willing to make. Comparing to a stable consistent relationship with TSMC.

> On the assumption that Intel is even price competitive. The Apple modem may be it.

Which is super interesting/ironic with the entire reason for an “apple modem” is due to Intels failure there a decade ago. Bonus irony for the subsequent acquisition.

Intel wasn't able to ship a competitive modem to Qualcomm and the whole point of the acquisition was to get rid of Qualcomm and even apple hasn't gotten a shipping version of a 5g modem for six years since the first intel modem started in 2018. This was really to vertically integrate the modem in all of the relevant Apple Silicon devices and it keeps going on...

At this point I'm starting to wonder if Intel's corporate strategy is "pray all of the fabs in Taiwan are destroyed during a Chinese invasion".

Then Intel is going to have to wait for a very long time. At best, China is currently in a scenario similar to Japan's lost decade of 30 years or US's Great Depression. At worst, China's current deflation + massive debt seems eerily similar to Weimar Germany's early internal devaluation. China is pretty fucked.

It's unwise to forget that the thing that pulled both the US and Germany out of the Depression was war.

US fully recovered from Great Depression in 1939, 2 years before entering ww2. Weimar Germany started in 1918 and ended in 1933 at the beginning of nazi Germany, 15 years later.

You can't start a war when you are truly broke, much like China is today. And China is aging super fast, unlike Germany or US during the 30s.

China is broke? That's news to me.

They're undergoing a difficult time sure, but broke seems like a stretch.

Japan has struggled for 30 years, but during most of that time have they been broke? Most countries in the world would love to "struggle" like Japan.

What does broke mean?

China still has a currency earning export juggernaut and world class companies.

And, they build everything they need for war.

Russia with its energy and China with its manufacturing has sufficient assets to wage a World War 3 whether the U.S. wants it or not.

Wars aren't financed the same as peacetime economies.

Countries impress factories and manpower into service.

In some ways, if your country is sufficiently self sufficient, it's much cheaper than running a peacetime economy.

Of course, if you lose, then you're wrecked.

Being in spiraling deflation while the rest of the world suffers from inflation is a big sign of being broke.

Having debt to GDP ratio of 310% and local governments being unable to pay out salaries for many months is a big sign of being broke. (google or chatgpt the salary news, they are everywhere)

Consumer spending dropping 20% y/y in November in Beijing and Shanghai is a sign of being broke.

52,000 EV-related companies shut down in China in 2023 and an increase of 90% on the year before, where most EV companies were the targets of government subsidies, is a sign of being broke.

30% drop in revenues from land sales in 2024, which the local government derive most of its revenue on, is a sign of being broke.

China is not self sufficient; it imports 80% of consumed soybeans and other food products, and 90% of semiconductor equipments. Nor is it even remotely at the same level as Japan when Japan entered the lost decades. 600M Chinese citizens earned less than $100/month as of 2020. Recently, a scholar reported 900M Chinese citizens earned less than $400/month.

> Being in spiraling deflation while the rest of the world suffers from inflation is a big sign of being broke.

How would you handle the eloquent counterargument that spiraling deflation is not a sign of being broke? Deflation doesn't, in and of itself, signal anything except that the real value of a currency is going up.

China is one of the worlds largest creditors [0]. They may have a lot of organisational problems - I'd go as far as saying they are guaranteed to given they are quite authoritarian. But they aren't broke.

None of those metrics signal problems in and of themselves, and when put together ... they still don't. The consumer spending drop is the closest to something that might be a problem but it needs some supporting data to make a case.

[0] https://en.wikipedia.org/wiki/Net_international_investment_p...

Deflation by itself, sure. Deflation when coupled with huge and increasing debt to service, then you have a crippling problem. That means your ability to pay off your debt gets harder and harder as time goes on, and most of your income goes to service debt principal and interest, and not on actual income growth. China plans a record $411 billion special treatment treasury bond next year, for example, but most if not all of that is just helping local governments pay off debts.

China being the largest creditor doesn't mean much when a lot of their debt is issued to belt and road countries that can never be paid back, and will be written off in the future. It does have a large US debt holdings, but that has shrank from 1.27T (2013) to 772B (2024), and a large part of that being used for cross border transactions.

> Deflation when coupled with huge and increasing debt to service, then you have a crippling problem.

Individuals have a problem. Corporations have a problem. China may or may not have a problem. It depends on how reasonable their bankruptcy laws are. Cleaning out the system of people who aren't using capital effectively is a healthy thing to do.

And I have to say, this idea that we should focus on China's debts and dismiss their credits is suspect. I mean sure, if we ignore all the assets and income streams then they do have a problem. But that isn't reasonable. You can't ignore the strengths to make an argument they are weak.

Let me put it in another way; it's similar to the US banks during 2008, when they appeared to be healthy, holding lots of subprime loans on their books.

If we are talking about China's credit, China has a lot of subprime loans to belt and road countries that have very little income, and lot of subprime loans to their citizens, which recently a scholar reported that 900M of them make less than $400/month.

Possibly. But if the US system was a wealth-producing engine like China's has been in recent history 2008 wouldn't have been all that big a deal. They'd have bounced back in a year or two. Instead in 2008 the US made decisive moves to preserve a system that isn't generating much wealth for the US, and over the course of around 20 years they've arguably managed to give up their position as #1 global economy and are packing stadiums full of people chanting "We love Trump. We love Trump". Looks to me like it is going down in history as a major turning point for the worse.

If China has to take decisive steps to preserve whatever craziness is going on in the mainland, they're going to be preserving a system that has at least 10x-ed their wealth over the last 30 years while producing vast amounts of real capital that has catapulted their living standards up to a much more reasonable standard.

I wouldn't necessarily gamble on China because the system doing well looks unstable and could veer to disaster at any moment the central bureaucracy does something stupid. But we don't have strong evidence of a problem yet. We've got strong evidence they aren't acting like the US, but the US hasn't been setting an inspiring example in decades. As with a lot of economic problems, most of the damage from 2007 was doubling down on failing strategy rather than taking the hint that something needed to change.

And I'm not seeing evidence here that China is broke. They might muck this up, always an option, but they have all the tools they need to succeed in principle.

> US fully recovered from Great Depression in 1939

this is disinformation. source: relatives that were alive in California and other states at that time

Tiresome take that's been repeated time and time again. China has problems like any other country larger than Luxemburg. But the conclusion that "china is fucked" sounds more like a wish than anything else to my ears. The Chinese economy is growing ~5% per year. It's got one of the worlds most well educated workforces. It's manufacturing everything from basics to high tech and very little indicates that's about to change anytime soon.

The chip technology sanctions might slow development in that area in China, but I wouldn't count on it.

It's pretty tiring responding to folks who just parrot Chinese government's official 5% numbers and never bothered look into the actual details. Like its well educated workforces being laid off at age 35, and 80% of recent graduates are unemployed or driving didi or delivering food. Or China's low end manufacturing shutting down or moving to Southeast Asia, and high end manufacturing being tariffed/sanctioned.

Here are some actual experts take on China: Longtime China bull Ray Dalio fears economy faces problems as severe as Japan in 1990 https://fortune.com/2024/09/18/ray-dalio-china-property-bubb...

or Private equity investors trapped in China as top firms fail to find exit deals https://www.ft.com/content/0575e216-8dae-4df6-bf50-312f78468...

or Starbucks reportedly mulling China business stake sale https://www.worldcoffeeportal.com/Latest/News/2024/November/...

Peter Zeihan is very witty but he's been saying the Chinese are three years away from cannibalizing each other for food for about ten years now.

IIRC you can add LG to the list of intel failures.

I don't get it. If TSMC has demand, then so could Intel. What am I missing?

TSMC makes nvidia GPUs and iPhone chips among other things, intel doesn't

There was some discussion awhile back about Intel potentially fabbing ARM chips (or any other custom non-x86 chip) as a viable business in the future. I don’t know how serious they were but it sounded plausible when you think about how important it is to have an American leading edge fab, independent of the market future of the x86 ISA.

Basically what would it take for Intel to still have Apple as a customer even if Apple made their own ARM designs…

The missing bit is "TSMC makes better chips than Intel" and thus they have higher demand.

Yes, but then there should be a higher level of urgency?

Urgency with what? You asked why TSMC has higher demand then Intel...

No, you have to read more of the thread to understand why I asked it.

> TSMC have red hot demand, it’s not hard to understand their urgency in setting up new fabs, wherever they may be. Intel don’t have the same incentive (...)

They set up a 3nm fab in the US in less than two years. That seems pretty urgent on TSMCs part...

The issue is even if Intel builds these fabs it's not a guarantee they get the customers.

This is Intel's real problem.

They are also a competitor to many of their potential customers.

So, Intel needs to advance their foundry tech and they still may not get customers.

You might be missing that you cannot just "port" across fabs.

I honestly don't believe that e.g. Apple couldn't relatively easily base their designs on a different underlying technology.

They do it all the time when they change nodes.

Drop another billion is sort of the name of the game here.

This. And the extra time and Human Resources required for redoing the design along with testing.

It is not that it cant be done. It is not reasonable or cost effective to do it without some clear incentive.

Why not? You might have to redo lots of phys work but essentially all of the RTL will be the same and that's the vast majority of the work.

Intel doesn't have demand because they only make Intel chips, and they haven't been doing too well lately.

They feed into each other especially for anything that isn't a vanilla gate. Got a deeply ported SRAM with bypasses? That might fail synthesis if it is too choked by wire rules for the size of the cells so now it's banking time.

Right, you might get a different PPA...

I think realistically you wouldn't port the exact same design between manufacturers. That would be a waste of money unless one manufacturer is really rinsing you.

More likely you'd switch manufacturers when you planned to switch process nodes anyway, in which case the increase in workload probably wouldn't be too bad.

I thought Xnm was just a marketing term and not related to any physical measurements? How are they going to legally enforce this if foundries can just change the naming convention?

Subjective enforcement is a great tool in cases like these. Not necessarily what’ll happen, but unclear criteria allows politicians to dictate what is “advanced”.

The measurement is roughly equivalent to the density that feature size would allow in previous generations. Intel ditched the number anyway.

If you believe you can consistently predict future like that, it should clearly guide your investment in stocks.

However, just like how quickly and suddenly Intel lost the lead, things may turn around for TSMC too: at some point, their research hits a dead end and somebody overtakes them too.

>If you believe you can consistently predict future like that, it should clearly guide your investment in stocks.

Perhaps I should have written with Disclosures. For the record I did invest in AMD when it was below $3 and TSMC at below $400TWD. None of these are investment advices so take it what you will. ( You get much better return with Tesla and Nvidia in the same period of time but then investment isn't always about best returns. ) And I was waiting to invest into Intel, unfortunately Pat is gone. To my words I said this in April 2023 [1]

"I am just worried if Stock price continue to fall, Pat may be forced out again by those stupid Board. And if Pat is out, I won’t invest in Intel at all."

As you will read in my reply below, I have a very negative view on Intel's board for a very very long time.

>However, just like how quickly and suddenly Intel lost the lead

It wasn't quick or even sudden. I wrote about it in 2014 and got a death threat from Intel Fan boys then. I have been questioning about Intel's management on GPU, Fab capacity allocation, CapEX, dividends etc for a very long time. For another point, TSMC never wanted to be the most advance manufacturing Fab. Them having leading node is purely accidental and Intel's slip up. They have been doing Intel -1 node for most of their history and are doing just fine. Providing Pure Play Foundry Services with Industry wide support on Tools at a reasonable / acceptable price for Fabless players. And right now, they are firing on all cylinders.

Again. None of these are investment advices and personal opinion only.

[1] https://news.ycombinator.com/item?id=35722974

"Sudden" with big enterprises is still a span of multiple years: probably iX-4 series CPUs hit the wall on performance, with power efficiency continuing improvements into 2017 with iX-8*U CPUs — so 2013 and 2017. And as soon as their first Tick-Tock blip hit, it was clear to everyone that they don't have a clear path forward.

In that sense, I fully expect the incumbent top fab to maintain the lead for a number of years even when a "sudden" competitor enters the market with clearer path forward.