Where are the Profits? Foundry Edition
We did some math to show market share and profit share in the foundry business. This data maps to intuition, but the scale of TSMC’s dominance and Intel’s declining fortunes stand out.
We did some math to show market share and profit share in the foundry business. This data maps to intuition, but the scale of TSMC’s dominance and Intel’s declining fortunes stand out.
Less than a decade ago, CPUs were the dominant form of compute and everyone ‘knew’ the market could only support two vendors. Today, there are over a dozen companies making CPUs.
China actually has as much trailing edge semis capacity as the US. With ~90% of the world’s chips still produced on these older nodes, we can understand why everyone wants to build these fabs, even if the commercial reasons for them are less compelling.
Every chip company has ambitions to sell software too – but there are very few software models that will work for them.
The data center silicon market is massive, but also challenging for incumbents let alone new entrants. We do some math to back this up.
There is a battle brewing for wireless network semis featuring Intel whose chip looks pricey, Marvel who is highly flexible and Qualcomm who has serious radio skills but also a history of losing interest in this market, and even a start-up, Picocom.
Open Ran – This is not your beautiful house. This is not your beautiful car.
Intel is in a very bad place. It needs to admit that, especially internally. We are not forecasting Doomsday, but we do think it is time to recognize that Intel will never be the force it once was, and probably has not been for a long time.
We think there will be a few more legs of semis consolidation. So we compiled a list of 5 semis companies who we think will survive:
1. ADI & TI
2. QCOM
3. NVDA
4. Some chip company from China
5. The smoldering remains of Intel, probably owned by others.
We are all familiar with software and Internet companies building their own chips. Less appreciated is the extent to which semis companies are all gradually morphing into software providers as well.