Article from Motley Fool that I actually agree with:
"Although Intel earns a higher gross profit margin than TSMC, by the time it reaches the bottom line, Intel is about 42% less profitable than TSMC. Clearly, designing and manufacturing chips doesn't come cheap. As a result, the market has given TSMC a valuation more or less in line with the S&P 500 and has discounted Intel by about 35%. As investments, TSMC and Intel differ greatly in scope."
The fabless semiconductor ecosystem exists for a reason, the traditional semiconductor companies moved too slow and did NOT innovate, simple as that. If you think that is going to change, if you bet against the fabless semiconductor ecosystem (TSMC, ARM, QCO, etc....) you will lose.
Is it possible for you guys to have a rational, civil discussion here? How about you Wallis? Without personal attacks? Why spend time here if that is all you are going to do? Attack anyone that does not agree with you. Seems like a colossal waste of time. Do you think attacking people here gives you credibility?
The expectation is that there will be 3 companies with ADVANCED fabs.
Others may eventually get to the advanced nodes as they can identify the $5b to $10b funding for the fab. There are companies who could fund a $10b effort. A company who needed vendor control and had a pile of cash (Apple?) might buy a foundry. Very unlikely but would cause all the analysts to change some cells in their spread sheets.
I thought the fabless ecosystem existed because the cost of the "next fab" became too expensive for them to individually afford. The "too slow and did NOT innovate" was as simple as their "tiny wallet" wasn't it?
"Well then, soon enough everyone will be fabless. Who will be left with the fab? Intel."
Don't forget Samsung. They are the real threat for Intel. Maybe Wallis can do one of his famous comparisons like he did with Intel versus ARM. Even though ARM is an IP company and Intel is a semiconductor company.
No, innovative people got tired of working for old school semiconductor companies and spun out on their own. Xilinx was the first. From the article: A Brief History of Field Programmable Devices (FPGAs)
"It is a familiar Silicon Valley story, Xilinx co-founder Ross Freeman wanted to create a blank semiconductor device that could be quickly programmed based on an application’s requirements. Even back then semiconductors cost millions of dollars to design and manufacture so this was not only a cost savings, FPGAs also dramatically reduced time to market for electronic products. Fortunately for us, Ross’s employer Zilog did not share this vision and Xilinx was created in 1984."
"To minimize start-up costs and risk, the Xilinx founders decided to leverage personal relationships with Japan based Seiko Epson Semiconductor Division. Seiko started manufacturing the first FPGAs for Xilinx in 1985 using a very mature 1.2m process. The first Xilinx FPGA was a 1,000 ASIC gate equivalent running at 18MHZ. Xilinx also pioneered second sourcing for the fabless semiconductor market segments using multiple IDMs for manufacturing to keep costs and risks in check. One of the more notable second sources was AMD who’s CEO at that time, Jerry Sanders, made the infamous statement “Real men have fabs!” AMD is now fabless of course."
"So you are saying to go Long or stay Long at ARMH 45 and QCOM 62. Let's see how your recommendation plays out."
I make no stock recommendations. I speak only to the technical side of things. Generally speaking I think articles on Motley Fool and Seeking Alpha are #$%$.
I don't agree. There are many inherent efficiencies and technological advantages in vertical integration (INTC) that the fabless model cannot possibly incorporate. The more the chip is designed intimately around the fab technology and the core level software (including secrity, etc. the better performance and cost advantages accrue.
I work with QCOM and can tell you they are more like a regular semiconductor company than a fabless one. The added advantage is that QCOM works with multiple foundries so they have a much larger knowledge base than a traditional semiconductor company or a fabless company that only uses one foundry.
Also, as one the larger purchasers of IP and EDA tools, every vendor bends over backwards for QCOm with custom IP, tools and flows. These custom tools and flows can then be sold to the rest of the fabless semiconductor companies. If you design a tool or IP for Intel or Samsung it can only be used by Intel or Samsung.
Just my opinion of course.