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TSMC warns over deepening slump in chipmaking sector

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Re: TSMC warns over deepening slump in chipmaking sector

#111

Post by HWR_14 »

jrockway wrote: post #22
cs702 wrote: post #17

TSMC just warned the world of a 10% decline in chip revenues. Given that chips today are critical component of every phone, TV, laptop, desktop PC, server, vehicle, dishwasher, and pretty much everything else , TSMC's warning suggests we're going to experience a significant global economic contraction soon. Hopefully I'm wrong.

I don't think that's true. If my BOM costs go down by 10%, I don't need to charge any less money for my product. If Apple could build an iPhone for 1 cent, why wouldn't they still charge $1000 for it? They can say it's how much iOS costs or whatever. (And hey, use the extra profit to hire more tax-paying iOS developers, making iOS even more valuable.)

Apple has moats around the mobile space far greater than the moats in, say, cars or washing machines.

Re: TSMC warns over deepening slump in chipmaking sector

#112

Post by ajb »

cs702 wrote: post #68
ajb wrote: post #19

Earlier quoted context omitted.

This isn't necessarily representative of the economics of downstream sectors, because it's probably caused by the Bullwhip Effect[1] like the recent semiconductor shortage. "The bullwhip effect refers to a scenario in which small changes in demand at the retail end of the supply chain become amplified when moving up the supply chain from the retail end to the manufacturing end." [1] https://www.investopedia.com/bullw…

I certainly hope you're right. Keep in mind: TSMC is entrenched in a lot of markets characterized by short lead times (say, < 1 month), and a 10% drop is a lot more than anyone -- including the company -- was expecting. Sometime ago I recall seeing charts showing that changes in TSMC's annual revenues are highly correlated with measures of global economic activity such as changes in Apple's global revenues and change…

During the shortage lead time for many semiconductor products went through the roof, so it would make sense that there has been at least some stockpiling. Probably you're right that that doesn't affect top tier products which are the bulk of the revenue, because those are the ones that got preferential access to fab capacity. Whether the stockpiling affected a big enough fraction of revenue to cause this effect is not something I have access to the data to know, so like you I am merely hoping that this is the explanation.

Re: TSMC warns over deepening slump in chipmaking sector

#113

Post by manderley »

mschuster91 wrote: post #91
hdjjhhvvhga wrote: post #78

Earlier quoted context omitted.

Sometimes I feel they are just testing our limits. Same with iPhone price increases. I guess they are going to continue until the net profits decrease.

Well, if they continue on that path the EU will mandate upgradeable storage next. I get why they do it though, my 2022 MB Air is serious competition against my work 2019 16" MBP. Far superior battery life, similar display quality (WTF that notch though), feels just as snappy with IntelliJ, 200+ Chrome tabs and Docker, and all of that despite just 16 GB RAM. No way to do that unless you got fast storage directly adjac…

The SSD isn't all that fast with the Air, though.

Re: TSMC warns over deepening slump in chipmaking sector

#114

Post by HWR_14 »

cjrp wrote: post #33
jrockway wrote: post #22

Earlier quoted context omitted.

I don't think that's true. If my BOM costs go down by 10%, I don't need to charge any less money for my product. If Apple could build an iPhone for 1 cent, why wouldn't they still charge $1000 for it? They can say it's how much iOS costs or whatever. (And hey, use the extra profit to hire more tax-paying iOS developers, making iOS even more valuable.)

I think the point is why has revenue dropped 10% for TSMC if everything downstream is going gangbusters? Doesn't it point to a drop in demand for chips, and therefore the retail devices they go inside?

During COVID, with chip shortages, everything downstream bought as many chips as they could get. Now they have stockpiles to work through.

Re: TSMC warns over deepening slump in chipmaking sector

#115

Post by pdonis »

jrockway wrote: post #104
pdonis wrote: post #97

Earlier quoted context omitted.

The cost of iPhones includes the cost of programming them.

But you're saying that moats wouldn't exist if the phones cost 1 cent? Why? I'm claiming that the cost of the iPhone in that world is from the included software, and the included software is their "moat". Cheap parts doesn't give you a "blue bubble" on iMessage. That's what the end user is paying for.

> you're saying that moats wouldn't exist if the phones cost 1 cent? Why?

Because if iPhones cost 1 cent to produce, the cost of everything that goes into producing them would have to be trivial. Which means any competitor could easily do the same as Apple is doing.

Of course that's not the case in our actual world; in our actual world, it would cost a huge amount of money for any competitor to do the same as Apple is doing. But that's my point: that very fact is why it costs Apple a lot more than 1 cent to produce an iPhone. Apple has expended huge costs on developing the product and keeping it ahead of competitors, and those costs amount to a lot more than 1 cent per iPHone. The high price they charge for iPhones is how they recoup those costs.

In other words, in the hypothetical I was responding to, Apple could not have done what they actually have done to make the iPhone a high end preferred product. Which means that all the moats that exist in our actual world because Apple did all those things to make the iPhone a high end preferred product, could not exist in that hypothetical world.

Does that mean the hypothetical is basically useless in understanding Apple's position in our actual world? Yes. That was part of my point.

Re: TSMC warns over deepening slump in chipmaking sector

#116

Post by HWR_14 »

landemva wrote: post #98
mschuster91 wrote: post #56

Earlier quoted context omitted.

> What's with all the doomslinging in modern discourse? Because public trust in the ability of governments to manage a crisis has gone completely fucking downhill, worldwide: - the US couldn't even manage to beat a gang of cave-living Islamist terrorists using kalashnikovs in 20 years, and had to flee the country in shame - we went through three years of a worldwide pandemic, then panicked governments acted like it w…

> NATO could do way way WAY more Where in NATO charter are they to interfere for a non-NATO country?

Under Article 4, which was invoked by Russia's invasion of Ukraine, the NAC can formally lead a joint response to any threat to any member (prior to any war). This led to a bunch of logistic support and prepositioning for closer NATO nations. It also led a joint decision for military material support for Ukraine, under the theory that it was cheaper support Ukraine today than fight Russia later.

Re: TSMC warns over deepening slump in chipmaking sector

#117

Post by xw4002 »

gorkish wrote: post #105
willis936 wrote: post #49

Earlier quoted context omitted.

That would imply there is a surplus somewhere, which there's not. There's a reduction in orders from a reduction in demand regardless of the state of the buffer.

It's still the same effect. Supply doesn't have to overshoot. Computer chips aren't just stamped out instantly; a complex chip with many hundreds of process steps can take months to manufacture. The latency of design/revision cycle means manufacturers are always doing everything they can not to overproduce.

> a complex chip with many hundreds of process steps can take months to manufacture.

"Three months, 700 steps" for the GlobalFoundries Fab in Malta, N.Y.

https://www.seattletimes.com/business/technology/three-month...

Re: TSMC warns over deepening slump in chipmaking sector

#118

Post by HWR_14 »

daniel-cussen wrote: post #77
cs702 wrote: post #17

TSMC just warned the world of a 10% decline in chip revenues. Given that chips today are critical component of every phone, TV, laptop, desktop PC, server, vehicle, dishwasher, and pretty much everything else , TSMC's warning suggests we're going to experience a significant global economic contraction soon. Hopefully I'm wrong.

[flagged]

> "Taiwan embraces capitalism, we have a monopoly in the surely insignificant niche of the most insignificantly sized transistors, we do not seek monopoly rents but we'll take your money if that's what we must do to let the system self-correct.". Basically turned their back on capitalism as a concept unto itself

I am very interested in hearing your description of capitalism that does not include taking windfall profits when demand shoots up and some examples of it in the real world.

Re: TSMC warns over deepening slump in chipmaking sector

#119

Post by HWR_14 »

AYBABTME wrote: post #84
bradleyjg wrote: post #12

Earlier quoted context omitted.

Houses too …

If anything, houses are going to stagnate until inflation catch up. No politician will want to sit in office while overseeing a nation-wide collapse of property value, this would tear the fabric of society too much. People can stomach making a stagnating investment, but they can't stomach making an investment that loses value, especially not when the investment is touted as a no-brainer and basic life goal investment…

Reagan did, and he was somewhat popular.

Seriously, preventing future politicians from doing this is part of why the central banks are independent in G7 countries.

Re: TSMC warns over deepening slump in chipmaking sector

#120

Post by somewhat_drunk »

HillRat wrote: post #58
cs702 wrote: post #17

TSMC just warned the world of a 10% decline in chip revenues. Given that chips today are critical component of every phone, TV, laptop, desktop PC, server, vehicle, dishwasher, and pretty much everything else , TSMC's warning suggests we're going to experience a significant global economic contraction soon. Hopefully I'm wrong.

Inventories are stacking up after the COVID supply chain crisis, so automotive and durable goods manufacturers are slowing down on input orders, even though demand for their products remains high. There's definitely a PC/smartphone demand slump (both sectors down around 10% YoY for Q2 2023), so add those two data points and factor in potential supply increases down the road due to CHIPS Act effects, and you're lookin…

New car inventories are increasing as well. Anecdotally, the US auto industry seems to be preparing for a slowdown.

https://www.coxautoinc.com/market-insights/new-vehicle-inven...

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