The idea of an autonomous, driverless future has been a core part of Tesla’s mystique, and its business plan. The lesson from the recent verdict against Tesla is not about the limits of driver-assistance technology, but about the hazards of stretching truth in pursuit of hype.
TSMC’s fab strategy rejects the gambler’s approach. By expanding capacity only for firm, long-term customer commitments, it ensures that its vast, capital-hungry plants stay full and profitable. Notwithstanding geopolitical pressures, this is not the time to change this recipe.
Is America warming up to giving China greater access to advanced technology products, including the latest AI chips, or is the government having a mood swing that can quickly reverse?
By Bolaji Ojo
The latest twist in the storied Journey of MIPS has just begun.
GlobalFoundries wants to buy MIPS and run it as an independent enterprise within its business. Doesn’t that sound like a storyline we’ve heard about MIPS before? In fact, the proposed structure of the deal has soothsayers predicting MIPS could return within the next 5 years to the market as a wholly independent enterprise, having been spun off by its latest buyer.
Of course, this may not happen. GlobalFoundries may make the union work so brilliantly that MIPS becomes very tightly enmeshed in the contract chipmaker’s DNA, giving the IP vendor a home finally. On the other hand, the nature of MIPS’ business combined with the interest of outside parties and current customers in having unfettered access to its IP may one day spur GlobalFoundries into setting the unit free again.
Read More »Have We Really Seen the End of MIPS?
Even with little legal success to date, the Trump administration’s misguided efforts to remake global trade and higher education threaten to wreck US leadership in semiconductors.
By Bolaji Ojo
What’s at stake:
Semiconductor makers perform better when production capacity utilization rates and the number of plants closely match customer demands. Those periods are getting fewer, however. Despite the proliferation of advanced demand-supply management tools, the industry continues to experience forecast distortions, especially in the number of semiconductor fabs needed to meet future demand. We describe the result as “MisCapex,” a condition of overestimating or underestimating capital expenditure requirements, leading to either bloated production or undercapacity. In either case, the remedies used so far by the industry continue to yield the opposite of desired objectives.
The semiconductor industry goes into a fab building frenzy every few years, driven by undercapacity that eventually leaves chipmakers dried out financially or swimming in the murk of excess inventories.
The last time this happened was only a few years ago.
Electronics companies reacted differently to the last bout of shortages. Some made plans to build more fabs while many others quietly watched the situation unfold, preferring to maintain their conservative capex planning. Today, companies in the latter category look prescient while others are dialing back on their commitments. Intel Corp., for example, is reviewing its capex commitments under new CEO Lip-Bu Tan and sharply cutting back expenses related to capital equipment and operations, including R&D.
In the face of more pressing and troubling issues, the semiconductor industry is trying hard to ignore its recent financial past. Yet, factors related to capital expenditure cannot be swept under the carpet because they are so fundamental to the health of the sector. The industry is finding itself locked in the grips of capex promises made at the height of the last supply shortages. Promises made to customers, consumers and even politicians will soon come back to haunt the industry. The Ojo-Yoshida Report is getting ahead of that Day of Reckoning by examining statements about and commitments to fab construction a few years ago and asking: Are the fabs promised during the last shortages still needed; How many of the fabs will be built and; how will chipmakers finance the ones they cannot walk away from?
Read More »Capex Malaise and ‘MisCapex’ Pains
Most business forecasts often turn out wrong, but analysts and companies keep churning them out. Are forecasts doing more damages than good in the electronics market?
Nvidia had for years known that it has a massive and growing China problem, yet it persisted in developing products for the country, ignoring America’s apprehensions and warnings. The solution is to exit the country before it is driven out both by China itself and the United States.
Intel’s new CEO used the opportunity of his first major public speech to provide a personal narration of his education, professional background and philosophical drivers.
By Bolaji Ojo
What’s at stake:
Intel is in a precarious position. In sales, it is still one of the biggest semiconductor companies in the industry, but the juxtaposition of its market value with those of rivals tells a dismal story. The recent appointment of Lip-Bu Tan as CEO marked the beginning of a much-needed house-cleaning at Intel. By not extending this exercise to the board of directors, the company is not holding long-term members to account or showing it understands the depth of the rot it must flush out.
Intel Corp. “is at a critical moment in its history,” and is facing “undeniable challenges.”
This critical assessment comes from Frank D. Yeary, chair of Intel’s board of directors. In a lengthy foreword to the company’s latest annual report, Yeary warns that Intel “has been overshadowed at times by our own execution problems and not enough focus on the needs of our customers.” The company, Yeary notes, must focus on “delivering long-term value for shareholders.”
This sounds fine, reading like a text that Intel’s financially bludgeoned investors could have written. Ironically, however, Yeary’s blunt analysis excludes one brutal fact; that Yeary and many of Intel’s long-serving directors have been a deadweight around the company’s neck, failing to provide the leadership it needed at critical moments over the last decade or more.
Read More »Intel Board Shuffle: Another Missed Opportunity
