TSMC warns over deepening slump in chipmaking sector • Hacker News Board

Re: TSMC warns over deepening slump in chipmaking sector

#61

Post by mschuster91 » Fri, Jul 21, 2023, 7:54 PM UTC

ykonstant wrote: post #30

jjoonathan wrote: post #21

Earlier quoted context omitted.

Real talk: ever since I put Windows and Linux on separate SSDs, rather than simply separate partitions, they haven't killed each others' bootloaders once . Best $100 I ever spent. My second tip for solving incompetent software with redundant hardware: TOSLink -> 1Mii Bluetooth Transmitter to avoid the catastrophic linux bluetooth stack. It's brilliant. TOSLink = no buzzing from inadequate shielding next to digital li…

Any specifics about the second paragraph anecdote? It seems like a serious scandal.

The sorry state of Bluetooth on Linux is well known at that point. Android had to roll their own stack because the standard BlueZ on Linux is a fucking pain.

Re: TSMC warns over deepening slump in chipmaking sector

#62

Post by karmicthreat » Fri, Jul 21, 2023, 7:56 PM UTC

cloverich wrote: post #41

seydor wrote: post #25

Earlier quoted context omitted.

houses need to reverse decades

The last few years in particular have seen a dramatic rise in housing prices[1]. Reversing even a few years would dramatically increase affordability for many people. [1]: https://fred.stlouisfed.org/series/MSPUS

Yea, but it would probably put many people underwater on loans.

Re: TSMC warns over deepening slump in chipmaking sector

#63

Post by dragontamer » Fri, Jul 21, 2023, 7:58 PM UTC

tschwimmer wrote: post #55

dragontamer wrote: post #2

This boom/bust is really obvious with regards to computer prices. I'm seeing 2TB NVMe PCIe 4.0 SSDs with 7000+ MBps under $100 these days. Almost everything in the computer-world is on a significant sale.

Got a link/model number? I’m always down for a new drive.

There's lots and lots of 2TB drives under $100 available. Just picking one that I know of:

https://www.westerndigital.com/products/internal-drives/wd-b...

Re: TSMC warns over deepening slump in chipmaking sector

#64

Post by mschuster91 » Fri, Jul 21, 2023, 7:59 PM UTC

dragontamer wrote: post #59

shmerl wrote: post #52

Earlier quoted context omitted.

I noticed that too. What does it mean? That demand is sinking or that costs are going down?

Computer parts are always high-margin. They're made out of purified sand after all, the raw materials of chips is excessively cheap. The ultimate price that consumers pay is very much related to demand and less about costs. The economics of chips is very interesting: its very expensive to design and develop a chip. But making additional copies of chips (or mass producing any design, really) is extremely cheap. ------…

> Computer parts are always high-margin. They're made out of purified sand after all, the raw materials of chips is excessively cheap.

The purification and especially the lithography (aka making actual chips out of a silicon disk) is what is expensive. The machines are pricey as fuck - a single line from ASML alone costs 200 million dollars, and that's just the machines for the lithography, not including the machinery that makes the ultra pure monocrystals, that slices them, or that cuts and packages them, or the cleanrooms and the remaining support infrastructure. Or the extremely specialized staff you need to actually operate them.

And it's a ton of money involved with very long lead times - say you're TSMC, you get an order for a batch of chips, and even if you had capacity starting tomorrow, the 700 steps to the final product take three months [1]. That's a massive amount of capital to be stuck for months, and errors can waste all of that.

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

Re: TSMC warns over deepening slump in chipmaking sector

#65

Post by pwarner » Fri, Jul 21, 2023, 8:02 PM UTC

ajb wrote: post #19

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.

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…

Very possible that this is a factor, it's very hard to sort out. I see execs and investors are nervous. Is it the bullwhip effect or am I seeing a real increase or decrease? You'll know looking back in a few years!

Re: TSMC warns over deepening slump in chipmaking sector

#66

Post by panick21_ » Fri, Jul 21, 2023, 8:03 PM UTC

bradleyjg wrote: post #12

christkv wrote: post #7

Good hopefully the prices will slide back towards pre pandemic levels making it more affordable for people

Houses too …

You don't heal 50 years of bad urban planning and bad housing policy in a short time.

Re: TSMC warns over deepening slump in chipmaking sector

#67

Post by cs702 » Fri, Jul 21, 2023, 8:05 PM UTC

cheriot wrote: post #35

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.

In addition to inventories like other commenters mention, remember this is a capital intensive business. When chip makers collectively add more capacity than is needed, prices drop (ie revenue drops). It could also be "normalizing" demand as people shift spending from goods to services. The possibility space is much larger than global recession.

I hope you're right. Keep in mind: TSMC is entrenched in a lot of markets, and a 10% drop is larger than anyone -- including the company -- was expecting.

Sometime ago I recall seeing that changes in TSMC's revenues are pretty highly correlated with measures of global economic activity such as changes in Apple's revenues and changes in global GDP.

Re: TSMC warns over deepening slump in chipmaking sector

#68

Post by cs702 » Fri, Jul 21, 2023, 8:06 PM UTC

ajb wrote: post #19

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.

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 changes in global GDP.

Re: TSMC warns over deepening slump in chipmaking sector

#69

Post by Analemma_ » Fri, Jul 21, 2023, 8:08 PM UTC

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.

This is a 10% decline from the large increase over the baseline trend that we saw post-covid when people had tons of disposable income. It's just a return to baseline and no big deal.

Re: TSMC warns over deepening slump in chipmaking sector

#70

Post by sumtechguy » Fri, Jul 21, 2023, 8:13 PM UTC

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.)

In economics the closer you get your price to be MR=MC the better off your profit. If they did as you said more than likely they would be leaving money on the table. This is usually a fairly common intro economics problem as it can seem unintuitive to lower the price to make more profit. Now iPhones do have somewhat of a 'monopoly' effect. But only to a point. In a monopoly you want MC=MD. https://openstax.org/books/principles-economics-3e/pages/9-2...

Apple falls in the middle of those two axioms. If Apple could pull of an iPhone for 1 cent there would be a flood of entrants into the market doing the same thing as making the things would be cheap and easy. At first some would pay the premium (pay for the name) but after awhile that premium would erode and it would seem odd to pay when you can get the same thing for wildly less money.