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0 pointsmarbro10mo ago0 comments

We outsourced manufacturing because it's not very profitable. The Mag 7 make 50x as much money as TSMC. Apple and Microsoft are the most profitable businesses in history.

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10 comments · 4 top-level

jandrese10mo ago· 3 in thread

The problem is when importance is not reflected in the quarterly profit margin.

treis10mo ago

Chips are one of those things where being the best is simultaneously very important and not at all important. Making a 10% better chip gets you the entire market. But it makes practically no difference if your cellphone or laptop or server or whatever has a 10% worse chip.

p1necone10mo ago

> Making a 10% better chip gets you the entire market

Gets you the entire datacenter market maybe. End user (PCs, cellphones etc) stuff is much more concerned about perf/$ (up front cost) than perf/watt (long term cost), and the embedded market (electronics, appliances etc) mostly care about 'good enough' as cheaply as possible - performance isn't a concern at all for many use cases.

And the corporate market mostly cares about (perceived) reliability/liability concerns over everything else - see how hard it's been for AMD cpus to penetrate despite being measurably better in every category compared to Intel at various points in time.

Workaccount210mo ago

The true place where the government should steer the ship of the market.

georgeecollins10mo ago· 2 in thread

Intel was very profitable until it was not. They spent over $800B on stock buybacks. That will buy you some fabs, some R&D. Its true they invested in R&D but not well. Maybe the answer was to fund an independent internal competitor to keep the org focused.

Financialization is a dead end when you face a nation state determined to control steps in you value chain. How profitable will apple be if they can’t get chips?

jandrese10mo ago

I still think Intel missed the boat when they had the dominant process in focusing entirely on their own chips and not taking customers for third party fabbing. Samsung and especially TSMC have demonstrated conclusively that the real money is in producing chips for other companies. It might be lower margin, but the volume is undeniable and it keeps your company on its toes with node improvements.

Intel switched to a "service the stockholders before the customers" mode and they have never recovered.

freeopinion10mo ago

TSMC does not compete with their customers. Intel would. I know that is not a new idea and there are some established mitigations. But it seems it would be better if it wasn't an issue at all.

2 more replies

ilikerashers10mo ago· 1 in thread

The EU outsourced manufacturing without any Mag 7.

I'm sure it'll work out well for us...

kazen4410mo ago

mind you that a lot of this outsourcing is also happening inside the EU from high wage western countries to lower waged eastern countries (poland, hungary, romania etc).

davedx10mo ago

No, we outsourced it for the same reason we outsource anything else: because someone else, somewhere else, is doing it for cheaper. It has nothing to do with the profitability of the manufacturing company and everything to do with the costs of the products and services to their customers

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