Ben Gilbert: belief

Transcript context

…That's a hard choice, actually. If you go back away, there is a long discussion in semiconductor companies of whether to go through the x-ray lithography. It turned out there's a lot of money invested in thinking about that. It was very contrarian. In the early 2000s, even Intel, I think, funded ASML's development of a big industry consortium including Intel of the UV and then thought the technology was going to die. I think three or four years in divested, whereas, obviously, now that's the dominant way that we have these three- and five-nanometer processes and TSMC is to benefit. Right. Under those really odd industry conditions, it means that if you're quite comfortable with forward guarantees of customers, you can make a huge capital commitment. It wouldn't matter much if there weren't those big material performance advances and it wouldn't matter much if it was not all that lumpy. You could do it in small increments. It wouldn't matter if it was relatively small amounts, and it wouldn't matter if it was all vertically integrated. That allows a scale company to get to the newer technology first. That has profound implications for continuing that cycle, but it means that they're lower cost per transistor and they also can do higher performance products, which probably are higher margin. Before TSMC, the companies that crossed that threshold of enough comfort with forward guarantees were the companies that sold the products. Back in the day when you guys are too young to remember this, but there was a time when IBM controlled the computer industry. There's nothing like that today where people talk about tech dominance, but IBM just was a force that was just so far and above everybody else. They backward integrated into fabs. They were the fab leaders because they could do this stuff. And then Intel. We've moved from a vertical to a horizontal organization of this. I may be too reductive about this. But to me, their pricing makes perfect sense even from a purely Machiavellian shareholder value kind of perspective. That allows them to get comfort with future customers.…

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