Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisnthal and I'm Tracy Halloway. Tracy, I had
Speaker 1: a thought, and it might be a little controversial, but
Speaker 1: what if um you with a controversial thought? Never No,
Speaker 1: it's like, I know, I'm just gonna throw this out
Speaker 1: there and tell me what you think. What if we
Speaker 1: made that Odd Lots wizon about market and finance anymore,
Speaker 1: but just about the semiconductor history? Could we maybe could
Speaker 1: we maybe start with a semiconductor series before we completely
Speaker 1: rebrand the podcast? All right, we'll we'll revisit the question
Speaker 1: of a total rebrand. But I don't know about you,
Speaker 1: but I found our episode a couple of weeks ago
Speaker 1: with Stacy Raskin from Bernstein about the kind of Intel
Speaker 1: to be fascinating, And after that, I was like, I
Speaker 1: just wanted to talk more chips, Like I just that
Speaker 1: like that really sort of like it really went my appetite.
Speaker 1: It was definitely a lot more interesting than I had
Speaker 1: been expecting. I think I mentioned when we recorded it
Speaker 1: that I hadn't been following all the ins and outs
Speaker 1: of the semiconductor industry, except of course, as it pertained
Speaker 1: to the US China trade tension. So I wasn't aware
Speaker 1: of some of the competition between the big makers, like
Speaker 1: just how bad things had gotten for Intel, and I
Speaker 1: wasn't aware of some of the strategic decisions that we're
Speaker 1: going into the making of their chips and the way
Speaker 1: that some other chip makers have proceeded in a very
Speaker 1: uh different direction. Yeah, right, it's that different direction that's
Speaker 1: interesting because, I mean, we talked with Stacy a lot
Speaker 1: about the sort of manufacturing issues that Intel has been
Speaker 1: facing as it tries to unveil it's seven animator chips.
Speaker 1: But there's more to the story than just faster and
Speaker 1: smaller chips. There's also a fundamental ship happening in what
Speaker 1: chips are and how they're used and how they're designed.
Speaker 1: It goes beyond just sort of manufacturing problems. Yeah, and
Speaker 1: I guess the big news on that front is Apple
Speaker 1: and its new series of Mac processors. Uh. That news
Speaker 1: came out this month, and everyone, as far as I
Speaker 1: can tell, all the technologists that have YouTube channels are
Speaker 1: very very excited about what exactly this means. I don't
Speaker 1: completely understand the technology, but I am interested in learning
Speaker 1: why everyone else um is so excited and why a
Speaker 1: lot of people are saying this is a game changer.
Speaker 1: I heard one there's one guy on YouTube who was
Speaker 1: talking about how this is going to make Apple computers
Speaker 1: basically on a different level to other types of computers.
Speaker 1: So in the way that we don't necessarily compare Apple
Speaker 1: phone with androids anymore, we will no longer be comparing
Speaker 1: Max with you know, your average PC. It's just like
Speaker 1: two different types of equipment. Yeah, there was like a
Speaker 1: medium article about the Apple chip then went viral on
Speaker 1: like articles about chips don't typically go viral, but that
Speaker 1: I think sort of gives you an indication of the enthusiasm,
Speaker 1: the excitement that people have for all this stuff. So
Speaker 1: definitely a lot to talk about. But I have to
Speaker 1: admit I still don't like really get it. Like I'm
Speaker 1: trying to read about this stuff and understand it, but
Speaker 1: I don't totally get Yeah, I'm in that same place.
Speaker 1: So today we are going to be talking more as
Speaker 1: anyone could have guessed about chips. And I'm very excited
Speaker 1: because in addition to being a sequel of sorts to
Speaker 1: that other chip episode, um our guest who is who
Speaker 1: writes on this stuff, and he's prominent on Twitter, etcetera.
Speaker 1: We're going to do something we've never done before. He's
Speaker 1: going to dos himself on this episod. So he's been
Speaker 1: writing under and tweeting under a pseudonyms, agreed to come
Speaker 1: on and with this episode actually tell us who he is.
Speaker 1: So this is a a totally new thing for us.
Speaker 1: I don't think we've done this before. No, we definitely haven't,
Speaker 1: and we should just stress this is a voluntary self
Speaker 1: docs scene. We haven't forced him into it or anything
Speaker 1: like that. That's exactly right. So we're going to be
Speaker 1: speaking with the author of the newsletter called Mules musing.
Speaker 1: He tweets under the handle at full all the time,
Speaker 1: great stuff on the matter of chips. But we're going
Speaker 1: to find out now who he is. So U Mule,
Speaker 1: thank you for joining the Outlaws podcast? Who are you
Speaker 1: and why are we listening to? Hey? I'm My name
Speaker 1: is Doug O Offlin, and I am just a huge
Speaker 1: nerd with an investing background. I guess I previously worked
Speaker 1: at a byeside firm in Dallas and kind of just
Speaker 1: taking a break tween things started writing a newsletter. Um,
Speaker 1: and clearly there's been a lot of interest in semi coonnucters,
Speaker 1: not just from you guys, but from the investing community
Speaker 1: at large, and it kind of just hit a note.
Speaker 1: So I'm I'm really obsessed with the whole you know,
Speaker 1: the whole revolution all the YouTubers are going crazy about.
Speaker 1: I'm obsessed, Like, it's not just um, it's not just
Speaker 1: all the technology stuff, but there's a lot of business
Speaker 1: and investing um things that could happen, and I think
Speaker 1: it's I think it's truly a revolution. Like it's it's
Speaker 1: about as exciting as it's ever been in semiconductors, which
Speaker 1: is frankly not that exciting, but it's still very exciting
Speaker 1: to me. UM. So yeah, that's that's what I've been
Speaker 1: doing recently. I have to say that while you were
Speaker 1: introducing yourself, I just had a look at your Twitter
Speaker 1: profile page and I saw the binary code on your
Speaker 1: profile and I looked it up and you must be
Speaker 1: the first All Thoughts guests that we've ever had who
Speaker 1: who has basically done like a practical joke in binary code.
Speaker 1: So um, kudos for that, and I guess I give
Speaker 1: some indication of of your interests. H and everyone else
Speaker 1: can go and check it out and translate it into
Speaker 1: English to see what it actually says. But before we begin,
Speaker 1: I'm curious, why did you decide to start the sub
Speaker 1: stack and why were you tweeting under the pseudonym to
Speaker 1: begin with? Well, um, especially in the past past, it's
Speaker 1: it's not you know, I was employed, and it's um,
Speaker 1: it's not you're not supposed to talk publicly about public
Speaker 1: markets if you're in the business. So that was that
Speaker 1: was the big reason for a pseudonym. And frankly, Finfoot
Speaker 1: is an amazing community. There's a lot of um, there's
Speaker 1: more information there than anywhere else, so it's it's an
Speaker 1: awesome place to learn. But obviously you have to be
Speaker 1: extremely private if youtuose to do so. So um that
Speaker 1: that was the reason why I under a pseudonym, and
Speaker 1: then the sub stack. I guess, um, I'm just kind
Speaker 1: of like in between things. Next year, if everything goes right,
Speaker 1: I'll take a little bit of a gap. But you know,
Speaker 1: I'm like born to do or keep researching and doing
Speaker 1: stuff like this, Like this was pretty much what I
Speaker 1: was doing in my free time, and I was like, heck,
Speaker 1: a lot of other people could really learn a lot
Speaker 1: from this. As well, and so then I started writing
Speaker 1: for a broader audience, and um, writing in general has
Speaker 1: been really fruitful. Like you, it's it's a crazy skill
Speaker 1: to have and I'm frankly not I'm getting a lot
Speaker 1: better at it, but it's still um, it's been a
Speaker 1: learning journey. So that's why I started the sub stack
Speaker 1: and I've just been kind of writing the wave. I
Speaker 1: have to say, I feel like a deep, emotional, resonant
Speaker 1: connection with your story. Because I got my start I
Speaker 1: worked for a small portfolio management company. I also started
Speaker 1: I started blogging in two thousand five under a blog
Speaker 1: called The Stalwart, which is now defunct, but that's why
Speaker 1: I got my Twitter handle, and it was kind of
Speaker 1: the same thing. I just wanted to practice writing for
Speaker 1: the skill of writing and keep up to date, and
Speaker 1: it was between jobs, so kind of like you. So
Speaker 1: I'm I'm a big fan of people with your art
Speaker 1: and I think big things. But let's let's move on
Speaker 1: and let's talk chips. I mentioned there's this a viral
Speaker 1: article about the Mac chip that came out, and articles
Speaker 1: about chips don't particularly go viral, but everyone's raving about
Speaker 1: this new chip from Apple, So why is the chip
Speaker 1: going vibral okay, so then yeah, now and I can
Speaker 1: talk ages about this. UM. So the the the M
Speaker 1: one chip is really exciting, so UM. The reason why
Speaker 1: is it's kind of it's kind of like a hybrid
Speaker 1: and we've we've seen we've seen it before, frankly, like
Speaker 1: your iPhone is powered by something that's similar to and
Speaker 1: M one chip, but we've never seen it for a
Speaker 1: Mac or a desktop or any other form factor other
Speaker 1: than iPhone. And part of it is because up until
Speaker 1: this point, all the laptops in the world have been
Speaker 1: mostly running x A D six. So x A D
Speaker 1: six isn't UM is like just think of it as
Speaker 1: like a language of processors. And for a long time
Speaker 1: that was kind of like, you know, the defen ACTO standard.
Speaker 1: But the iPhone getting a lot better has pretty much
Speaker 1: made a second language become a lot more popular, which
Speaker 1: is ARM. And now that it's become a lot more mature,
Speaker 1: it's actually kind of um. In the past, it never
Speaker 1: was fast enough to really compete in a actual computer,
Speaker 1: but now it seems to be that the M one
Speaker 1: chip is like supermature. The ARM infrastructure is ready and
Speaker 1: the laptop looks really compelling, and a big reason for
Speaker 1: what that is is it's not really a CPU like
Speaker 1: it's it's actually a lot of different dies on one
Speaker 1: giant die, and it looks like there's a lot of
Speaker 1: benefits of arm over x eight six that we didn't
Speaker 1: even know where possible up until the M one came out.
Speaker 1: So so, I mean, I think from what I understand,
Speaker 1: this is kind of the heart of it. So normally
Speaker 1: when we talk about chips, you know, certainly when we're
Speaker 1: talking about chips made by Intel or m D or
Speaker 1: something like that, we're talking about CPUs, these central processing units.
Speaker 1: But the Apple hip, the M one is not a CPU.
Speaker 1: It's it's something else, or only one component of it
Speaker 1: is a CPU. Can you can you explain that in
Speaker 1: a bit more detail. Yeah, So it's called a system
Speaker 1: on chip or sock, and what that means is that
Speaker 1: it's it has a traditional die like any other piece
Speaker 1: of silicon, but there are little pieces on the silicon
Speaker 1: that each have different jobs. And so instead of having
Speaker 1: one giant piece of silicon that does everything kind of
Speaker 1: well pretty much, this this silicon each has little parts
Speaker 1: that do their job really well, and then together it
Speaker 1: does a lot better as a system, because it's like, hey,
Speaker 1: instead of having a ton of random you know, instead
Speaker 1: of having a general computer that can do everything kind
Speaker 1: of well, they have like, you know, ten specials in
Speaker 1: the house. And when you look at a laptop, really
Speaker 1: you're only doing ten types of workloads or or however
Speaker 1: many number of workloads. And so they said, instead of
Speaker 1: trying to make just a faster CPU, why don't we
Speaker 1: specialize a little bit, and we'll break down all the
Speaker 1: things that the Mac the laptop has to do, and
Speaker 1: we're gonna make them do it really well and with
Speaker 1: these specialized ships. So that's pretty much what I'm what
Speaker 1: the differences, and so this is kind of in the
Speaker 1: picture of the broader things kind of been a revolution anyways,
Speaker 1: Like getting off the CPU has been happening for a
Speaker 1: long time. And part of the reason why now it's
Speaker 1: become such a big shift is because, you know, in
Speaker 1: the last episode with Stacy, guys talked about more laws
Speaker 1: slowing down or maybe it's even you know, they love
Speaker 1: to say it's dead. It's not quite dead, but it's
Speaker 1: it's slowing down quite a bit. And so now the
Speaker 1: road for it definitely seems to be specialization and so
Speaker 1: the M one did this really well. It's specialized in
Speaker 1: a lot of different ways, put it all onto one
Speaker 1: piece of one piece of silicon, and also coupled the
Speaker 1: memory really close together, which is a whole you know,
Speaker 1: kind of in the same vein but a little different.
Speaker 1: And now the M one just rocks. Frankly, it's it's
Speaker 1: not yeah, it's it's a little bit shaky as a
Speaker 1: first product, right like the Apple Watch one or the
Speaker 1: iPhone one wasn't the best product ever, but it's still
Speaker 1: it still is, um a miracle, quite frankly. So you know,
Speaker 1: you talk about how this sort of emerged out of
Speaker 1: Apple's chips for the iPhone and something I think, you know,
Speaker 1: like I buy a new iPhone every few years like
Speaker 1: anyone else. Um, I don't buy every single one that
Speaker 1: comes out, but you know, when my mine feels like
Speaker 1: it's getting old or whatever, I buy a new one.
Speaker 1: But honestly, the only thing I do on my iPhone
Speaker 1: besides tweeting is taking photos. And so even though like
Speaker 1: I have this like incredible computer in my pocket, basically
Speaker 1: is just a camera with Twitter attached or Twitter with
Speaker 1: a camera attached. And so I'm curious like how much
Speaker 1: has this sort of like shift tour words. Uh, These
Speaker 1: sort of focused tasks instead of generalist chips come out
Speaker 1: of this fact that yes, you have I have this
Speaker 1: whole computer. Well, there's one thing that it's really important
Speaker 1: for the iPhone to do for a lot of people,
Speaker 1: and that is take really clear can really uh really
Speaker 1: clear photos, and this sort of recognition that there are
Speaker 1: just a few simple tasks that on a phone you
Speaker 1: have to get done extremely well for most people. Yeah,
Speaker 1: that's actually the perfect that's like the perfect thing to
Speaker 1: bring up because on the Apple phone, right, the A
Speaker 1: fourteen or A fifteen or whatever iteration of the A chip,
Speaker 1: the biggest die, the biggest specialized die is something called
Speaker 1: an IPU or an image process Sorry can you die when? Uh?
Speaker 1: Die is just like a piece of silicon. Sorry, it's
Speaker 1: it's um. Yeah, just just think of it as like
Speaker 1: a unit of silicon, if that makes sense. And the
Speaker 1: biggest piece of like that's been taking share from everything
Speaker 1: else is an IPU, and the CPU has become a
Speaker 1: smaller and smaller part and similar in that same vein right,
Speaker 1: like computers, one of the things that we've been using
Speaker 1: the most is GPUs to play video games. So just
Speaker 1: like the CPUs kind of losing relevance or the you know,
Speaker 1: the CPS losing relevance in your phone to an IPU
Speaker 1: or for your images in in a desktop computer, for example,
Speaker 1: the CPU seems to be losing relevance to a GPU
Speaker 1: for a lot of people who are using it for games.
Speaker 1: So kind of that same that same energy is you know,
Speaker 1: disrupting one and the other. And I think you ask
Speaker 1: a question about like why Apple Apple in the iPhone
Speaker 1: specifically kind of like shifted over to the Mac. What's
Speaker 1: interesting about that is in the iPhone itself, they actually
Speaker 1: had a lot of requirements that were not that you
Speaker 1: didn't really need to use in a in a computer, right, Like,
Speaker 1: it has a lot smaller form factor, it has a
Speaker 1: battery life constraint. It has to also not have a
Speaker 1: fan to actively cool it, and so all these things.
Speaker 1: Um in the beginning, we're just like, you know, a
Speaker 1: pain pain for them to to manufacture around. But as
Speaker 1: they got better and better and better, they pretty much
Speaker 1: got really close to a laptop in an iPhone. And
Speaker 1: that's while having a smaller form factor, while having no
Speaker 1: active fan. And then they're like, wait, why don't we
Speaker 1: just do this for a laptop. And so that's kind
Speaker 1: of what they did. And the M one really is
Speaker 1: like a super souped up um Apple chip. And the
Speaker 1: the announcement that you guys just broke the story on
Speaker 1: is that they're going to actually be making even bigger,
Speaker 1: beefier versions of this because the M one is actually
Speaker 1: made to be put in a laptop with no active cooling.
Speaker 1: Like that's also a big part of it. There's like
Speaker 1: it's supposed to not heat up, it's supposed to not
Speaker 1: have a fan. But what if we what if we
Speaker 1: just like let it run loose and you know, actively
Speaker 1: cool to put a fan. See how hot, how hot
Speaker 1: we can get this thing going? And I think what's
Speaker 1: gonna happen is we're gonna be really shocked by the outcome.
Speaker 1: And so all the manufacturing and the constraints that they
Speaker 1: had to do to make the chip fit into a
Speaker 1: small phone pretty much when you actually scaled it up
Speaker 1: into a laptop, it made it a lot better. And
Speaker 1: that's kind of part of the M one, you know,
Speaker 1: the Apple silicon magic. And Apple isn't the only company
Speaker 1: pursuing this, like I think, you know, almost every company
Speaker 1: is kind of looking at Intel and saying like, okay,
Speaker 1: we need to transition off this vendor. And whether it's
Speaker 1: a data center or whether it's a phone, or whether
Speaker 1: if it's um anything else, Like everyone is kind of
Speaker 1: going this way. And that's what's exciting. Is this isn't
Speaker 1: just an Apple story. Qual Calm mentioned they might do
Speaker 1: heterogeneous chips, which is like one way to call this
Speaker 1: whole thing is heterogeneous, as in many different types of
Speaker 1: chips put together into a larger package. And so you know,
Speaker 1: Android might have a similar and one like chip very soon.
Speaker 1: That's probably you know, a few years away. But the
Speaker 1: writings on the wall that everyone has to shift into
Speaker 1: the this kind of M one style of chip, if
Speaker 1: that makes sense. So it does make sense. Um, this
Speaker 1: is actually what I want to ask you next. So
Speaker 1: I think I understand why Apple sort of struck upon
Speaker 1: this design given its experience with the iPhone, why it
Speaker 1: thought that specialized chips for specialized asks would be more efficient.
Speaker 1: But why was it able to actually produce the chip
Speaker 1: ahead of time? Or maybe another way of saying this
Speaker 1: question is, Um, why was Apple able to do this when,
Speaker 1: as you just mentioned, the entire industry seems to, you know,
Speaker 1: maybe at different speeds be moving in this direction. So
Speaker 1: Apple silicon has always been a leader. They've they've been
Speaker 1: they've been crushing it for a long time. But in
Speaker 1: particular this this kind of goes back to the last
Speaker 1: episode you guys had. T SMC really enabled them to
Speaker 1: do this, and Apple has been buying and building silicon
Speaker 1: expertise in house for years. This is not an overnight
Speaker 1: success story. The the original chip, like the A seven
Speaker 1: or whatever, was when they first started to um to
Speaker 1: really make this more heterogeneous, and they've been every year
Speaker 1: it adds more specialization, and it's gone to this point
Speaker 1: where now the CPU is like one of the not
Speaker 1: the least important, but it's just one aspect of the
Speaker 1: chip in the phone. And so Apple has been doing
Speaker 1: this for a long time. T s MC has been
Speaker 1: a huge part of it enabling this, and then other
Speaker 1: companies kind of look to Apple and are seeing like, okay,
Speaker 1: we can do this too. So I hope that kind
Speaker 1: of answers the question when it comes to manufacturing, and
Speaker 1: of course that was the big thing we talked about
Speaker 1: on our last chip episode, and this idea that it's
Speaker 1: like getting more and more difficult to sort of shrink
Speaker 1: these chips have the smaller an animator form factor. Is
Speaker 1: that an issue here? Or does sort of rethinking the
Speaker 1: fundamental architecture of the chips such that it's it is
Speaker 1: h heterogeneous chip. Does that sort of sidestep some of
Speaker 1: these issues? If that's does that that questions? Yeah? Yeah?
Speaker 1: Um actually, I think that's the huge driver of why
Speaker 1: this whole thing exists, right, Moore's law slowing down and
Speaker 1: the struggle to to shrink smaller and smaller pretty much
Speaker 1: made them think, um, hey, we have to improve this somehow.
Speaker 1: We can't do it through the ways we used to
Speaker 1: do it. Why don't we specialize a little bit. So
Speaker 1: it's kind of like a mix of both that's happening
Speaker 1: at the same time. I definitely think that the desire
Speaker 1: for better, faster chips was what helped the heterogeneous revolution begin.
Speaker 1: But um t SMC being there to essentially make it
Speaker 1: so that anyone who isn't because in the past they
Speaker 1: all until also owned the method to get smaller. Right,
Speaker 1: So it's like, you know, you can't compete against some
Speaker 1: a general chip that's getting smaller, getting faster, better, faster
Speaker 1: than you could specialize your chips faster. But now that
Speaker 1: t SMC is clearly in the lead and anyone can
Speaker 1: can reach out to them and work with them, now
Speaker 1: everyone's like, well, why don't we just make our own
Speaker 1: special little chips? And so that's really been um kind
Speaker 1: of all the things that's made this happen at this
Speaker 1: right moment right now. I mean, on that note, how
Speaker 1: easy is it going to be for competitors to make
Speaker 1: these specialized chips? Then are they going to be able
Speaker 1: to do the same thing that apples do? And in particular,
Speaker 1: is Intel going to be able to do it? Given that,
Speaker 1: as we discussed in the last episode, their business seems
Speaker 1: to be almost entirely based on this idea of selling
Speaker 1: you know, general purpose CPU which then can go into
Speaker 1: a large variety of desktop PCs or whatever. Yeah, so
Speaker 1: Intel is already pursuing this. I mean, the people in
Speaker 1: Intel are smart and they know what they're doing. Um,
Speaker 1: but they're obviously tied to a very large platform. It's
Speaker 1: something called Phobos, which is like kind of their method
Speaker 1: of stacking the chips together. They have this um, this
Speaker 1: new platform and their Intel architecture. Day They're like, okay,
Speaker 1: we're gonna go all in on chiplets, like we're going
Speaker 1: to do the same thing that everyone else is doing.
Speaker 1: But that kind of brings it back to the point
Speaker 1: like Intel is going to be doing the same thing
Speaker 1: that everyone else is doing. And if they don't have
Speaker 1: the manufacturing advantage like they used to, pretty much everyone's
Speaker 1: on the same level playing field and it's it's for
Speaker 1: real right now. Am D for example, does have like
Speaker 1: a big, big reason why they won was kind of
Speaker 1: like a process heater geneous thing where it's like, Okay,
Speaker 1: we don't have to be the fastest, you know, we
Speaker 1: don't have to have the smallest um chip. But what
Speaker 1: we're gonna do is we're just going to make sure
Speaker 1: this really important part is is super small and that way,
Speaker 1: you know, it's like getting across across the finish line
Speaker 1: um by having the best of the little pieces that
Speaker 1: really matter and having a lot of like not as
Speaker 1: good pieces that didn't really matter as much. And so
Speaker 1: they're everyone is kind of going to this like hybrid playbook,
Speaker 1: and every company to a certain extent is pursuing this.
Speaker 1: And yeah, I mean I can talk to individual companies
Speaker 1: in particular, but like I know, it's like I know,
Speaker 1: it's a lot to wrap your mind around sometimes. So
Speaker 1: when we think of Intel, we think of this sort
Speaker 1: of like basic business model, which I guess you know
Speaker 1: still exists. Is still primates tons of one a where
Speaker 1: the the one company makes the chips and then another
Speaker 1: company puts together boxes or laptops or servers where they
Speaker 1: assemble various components, taking Intel chips or chips from elsewhere
Speaker 1: and then packaging them and distributing them, etcetera. Apple is
Speaker 1: always kind of the strewed that model, being much more
Speaker 1: vertically or horizontally integrated, I can never remember which is
Speaker 1: which and having a sort of custom set. Is that
Speaker 1: fundamental model going to remain or is there going to
Speaker 1: be pressure on the very premise of having a separate
Speaker 1: computer that's distinct from a chip. So, yeah, that's a
Speaker 1: great question, I think. Um, I mean, man, I can't.
Speaker 1: I think something that's happening in the near term is
Speaker 1: definitely verticalization, like you're seeing it with Apple, and they're
Speaker 1: they're probably furthest down the road. I actually wrote about
Speaker 1: this quite a bit, But like Amazon in some ways
Speaker 1: is making sure that their whole data center is pretty
Speaker 1: much owned by them using arm chips that they license
Speaker 1: manufactured on t SMC and in some ways, they're their
Speaker 1: whole data center will be vertical and they'll start to
Speaker 1: like think of the data center as a giant computer.
Speaker 1: They'll own the entire thing, and it won't be like
Speaker 1: how it used to be where you could build your
Speaker 1: own computer or in this case, a data center. Instead,
Speaker 1: you're going to be forced to be vertical, just like
Speaker 1: Apple is kind of for your phone, if that makes
Speaker 1: any sense. That's a huge that's a huge new trend
Speaker 1: that is like right now happening. The AWS announcements last
Speaker 1: like the last week or so pretty much they announced
Speaker 1: like three pieces of custom silicon, which is which is crazy.
Speaker 1: So so they're they're doing this, but think of think
Speaker 1: of it in a much bigger picture versus Apple out
Speaker 1: a much smaller picture. And same with Microsoft, same with UM,
Speaker 1: same with Google especially, and Facebook has even recently hired
Speaker 1: someone to probably start this this path for them as
Speaker 1: well too. So I have a dumb question kind of
Speaker 1: going in the opposite direction. But if Apple is making,
Speaker 1: you know, this new type of chip that everyone is
Speaker 1: very excited about, could they ever sell it on the
Speaker 1: market in the way that you know, Intel sells its
Speaker 1: chips or does it just not make any sense for
Speaker 1: them to do it. I think I think it makes
Speaker 1: a lot of sense. The YouTube community is freaking out
Speaker 1: right now about if M one can run Windows, because
Speaker 1: if it can, that would be awesome, and so Apple
Speaker 1: could actually, um they could sell it. I don't know
Speaker 1: if that would be kind of like in their ethos right,
Speaker 1: like they make very very defined um in like a
Speaker 1: very closed ecosystem, but um, yes they could, and even
Speaker 1: Microsoft would buy it for their UM for their high
Speaker 1: end surface books. A lot of a lot of the
Speaker 1: laptop O E M s would definitely be an insta buyer.
Speaker 1: So um yeah, if they wanted to, they could instantly
Speaker 1: they could open it up and sell it, and I
Speaker 1: think it would be really good for their business, Like
Speaker 1: it would be gross margin, a creative. Um it's actually
Speaker 1: probably more profitable than selling the phones out right, which
Speaker 1: is crazy to think about. And I have two questions.
Speaker 1: One is very short and one is a little that
Speaker 1: following onto what you just said. Hey, I you've said
Speaker 1: the term ARM or you talked about ARM a few times.
Speaker 1: What does ARM mean or what does it stand for?
Speaker 1: What does it represent and to just there you said,
Speaker 1: the question is can it run Windows? What do we
Speaker 1: really talking about when like, here's this powerful chip, can
Speaker 1: it run a piece of software? What would be the
Speaker 1: tension or the difficulty in running Windows? And how much
Speaker 1: does that sort of add to all this this this
Speaker 1: need to sink the chip with the with the operating system. Okay,
Speaker 1: so arm is UM is kind of one of those languages.
Speaker 1: I don't remember what it stands for off the top
Speaker 1: of my head, but it's it's actually it's it actually
Speaker 1: got sold to Navidio. Well it's in the process of
Speaker 1: the deal to the video, which is like, you know,
Speaker 1: super High States is arm accompany? Yes, Arms arms a company. Yeah,
Speaker 1: I mean I know that arm is a company, but
Speaker 1: it's also a language. Like this is where I always
Speaker 1: Army is a company, and they pretty much they pretty
Speaker 1: much license their software. They're they're tied their language of
Speaker 1: silicon out to anyone who wants to use it. So um,
Speaker 1: whenever ARM licensit, they essentially say like, hey, you can
Speaker 1: you can use this, will even help you tinker with
Speaker 1: it a little bit, make sure it works out, and
Speaker 1: you're gonna have to like two of revenues or something
Speaker 1: like that. It's usually a percentage of and it's it's
Speaker 1: pretty cheap for a lot of companies, like right if
Speaker 1: you if you don't have any silicon expertise in house,
Speaker 1: like building anything from the ground up is you know,
Speaker 1: probably a billion dollars plus enterprise. And so ARM just
Speaker 1: does that all for free. You can essentially just buy
Speaker 1: off the off the shelf ARM you know, cores or
Speaker 1: i P and then you can kind of build build
Speaker 1: your own little piece UM itself and and UM. Oh
Speaker 1: and so the software side of it, so x A
Speaker 1: D six is pretty much what everything for the PC
Speaker 1: has been built on. ARM obviously is everything mobile has
Speaker 1: already been built on UM. And there's kind of been
Speaker 1: this push, this push and pull right like because ARM
Speaker 1: right now definitely has the ecosystem momentum, but UM people
Speaker 1: are really nervous. Like even even the laptops, the M one.
Speaker 1: The biggest problem with the new Mac laptops with with
Speaker 1: the M one in it is that some of their
Speaker 1: some of the programs won't work with it and you
Speaker 1: pretty much have to you have to redo it to
Speaker 1: make it into UM an ARM compatible style. However, I
Speaker 1: mean a lot of companies kind of can see what
Speaker 1: the writing on the wall is. So they are. But
Speaker 1: there's also something called an emulator where essentially it's like
Speaker 1: the ARM chip will run a mini you know, fake
Speaker 1: x A six and then it will by using that
Speaker 1: like you know emulation, it can do can move that
Speaker 1: software and use it on that hardware. But um, so
Speaker 1: it is a big deal. So right now it seems
Speaker 1: like Windows um from my understanding, can run on M
Speaker 1: one and but the problem is like when it does,
Speaker 1: it's gonna be buggy, Like have you ever used a
Speaker 1: Linux computer for example, Like you can't play video games
Speaker 1: on the next computer because they're not compatible. And so
Speaker 1: that same, that same kind of like problem with the
Speaker 1: software ecosystems is going to have to be hammered out
Speaker 1: and that's gonna, um a huge growing pain for everyone involved.
Speaker 1: So I'm curious. Everyone is very excited about these specialized
Speaker 1: chips is And we were talking a little bit about
Speaker 1: Moore's law at this idea that like maybe it's not
Speaker 1: completely dead, but people are having to look at new
Speaker 1: ways to make their chips more efficient rather than just
Speaker 1: making them faster. After we do this, after we do
Speaker 1: these integrated chips or whatever, you want to call them.
Speaker 1: What's the next big thing that you see down the
Speaker 1: line for the industry. It's kind of like there's this
Speaker 1: like mix of things going on. We're still getting smaller, right, Um,
Speaker 1: that's that's one thing. That's a huge, a huge thing. Um.
Speaker 1: TSMC just had their five minimeter as we discussed, as
Speaker 1: you guys discussed in your last episode. Um, you know,
Speaker 1: the nanimeters don't actually mean anything anymore. It's still a
Speaker 1: marketing term. But but you do get benefits from getting smaller.
Speaker 1: So that's still going to continue, just at a slower pace. Um,
Speaker 1: the specialization is going to continue until it stops working.
Speaker 1: And people there's kind of like you know, I've been
Speaker 1: I read this paper that there is a theoretical limit
Speaker 1: until when that stops working, but like we're going to
Speaker 1: keep running down that road until it stops working. After that,
Speaker 1: I I really don't know. I mean quantum stuff. You know.
Speaker 1: I keep hearing and reading and researching and trying to
Speaker 1: figure out if this is real. Clearly it's a little
Speaker 1: bit away, but that would still only be really useful
Speaker 1: for a very small subset of problems. And so I
Speaker 1: think the way that we're going down which is specialization
Speaker 1: is probably the the surest surest way forward. And not
Speaker 1: only will it become it will like start from most
Speaker 1: of the hardware, but like the software will probably start
Speaker 1: to have have to be written better to couple with
Speaker 1: the hardware. That's something that's like a big trend where
Speaker 1: UM where the software and the hardware will kind of
Speaker 1: specialized together. Because that's that's something that you can continue forward. Right,
Speaker 1: Like the less flexible it is, the faster it will be,
Speaker 1: versus the more flexible the less faster. And so if
Speaker 1: you can just like kind of make it as at
Speaker 1: the least flexible as possible in theory, you can make
Speaker 1: everything into an ASI, and the speed ups that you
Speaker 1: get between UM specialization and non specialization are our magnitudes
Speaker 1: order faster. So that's the reason why it's so exciting,
Speaker 1: because it's like you could have UM if you could
Speaker 1: if you just made a single program that only had
Speaker 1: to run one type of thing, you could make it
Speaker 1: a hundred times faster by just running it on the
Speaker 1: most specialized chip possible. Now you have to be really
Speaker 1: really sure that all you want to do is just
Speaker 1: this program and UM. A great example of this is
Speaker 1: Google's TPU, which is a tensor processing unit, which is
Speaker 1: their their ecosystem called TensorFlow, which is focused on deep learning.
Speaker 1: So Google is like, hey, we know that we're gonna
Speaker 1: be running a lot of tensor TensorFlow in the future,
Speaker 1: and AI is going to become this huge exponential problem.
Speaker 1: So we're gonna make We're gonna make a chip that
Speaker 1: only runs TensorFlow. And it's really really fast. It's um
Speaker 1: compared to how would be done on a CPU. I
Speaker 1: couldn't really tell you, but it's like ten two hundred,
Speaker 1: maybe even more like the magnitude it's it's a lot faster.
Speaker 1: And so until the specialization stops working, I don't really
Speaker 1: see anything that's going to um gonna stop stop it
Speaker 1: for now. So basically it sounds like sort of wrapping
Speaker 1: some of these thoughts together, is that as chip architecture
Speaker 1: has migrated towards more specialized tasks, more specific tasks you
Speaker 1: just mentioned Google and it's deep learning AI stuff, it
Speaker 1: really becomes more part and parcel with every technology. So
Speaker 1: if you're working on machine learning or AI, you it's
Speaker 1: almost like you have to have a chip component to it,
Speaker 1: or I guess maybe it makes sense to pursue a
Speaker 1: chip component rather than just sort of writing code, writing
Speaker 1: software and then running that generic off the shelf chip
Speaker 1: from some other companies. Yeah, that's the perfect way to
Speaker 1: put it together. And and frankly, it used to be awesome,
Speaker 1: and we used to just do it, like think about
Speaker 1: how awesome would be. It's like, oh, you can just
Speaker 1: write the software and every year it just gets you know,
Speaker 1: every two years it gets faster, like faster. Um, you
Speaker 1: didn't have to think about any of this, and it's
Speaker 1: it's a pain to think about all this stuff where
Speaker 1: it's like, hey, we have to make a custom chip
Speaker 1: platform in order for our software to get faster. You know,
Speaker 1: we missed the old days of more slow for a reason.
Speaker 1: But now now that we're slowing down, clearly clearly like
Speaker 1: we're gonna have to do some very specialized, very top
Speaker 1: to bottom structures of software and hardware that work together
Speaker 1: to make the best outcome. So so I just have
Speaker 1: a couple more questions. But one that I'm interested in
Speaker 1: is like, you know, we've been talking about Intel, We've
Speaker 1: been talking about Apple, We've been talking about Google, Amazon,
Speaker 1: in video and Taiwan Semi. But in video has become
Speaker 1: this monster, and I'm curious like their role in it
Speaker 1: because I mostly think of them as a company that
Speaker 1: makes chips for video games, but then I always see
Speaker 1: stuff like about how they're also doing stuff with self
Speaker 1: driving cars and sometimes I see these really cool demos
Speaker 1: or like other sort of machine learning image recognition types
Speaker 1: of thing. What is their role in the ecosystem? What
Speaker 1: is their competitive advantage and how did they emerge to
Speaker 1: be just like such an incredible player in the stock's
Speaker 1: just done? Wild? Yeah, yeah, so the company is wild.
Speaker 1: Jensen Jong is awesome, like he's he's he's an amazing CEO,
Speaker 1: but notoriously um, notoriously stubborn. He's very like Steve Jobs.
Speaker 1: Ask GPUs think about this way that there's a gradient
Speaker 1: of like the most general to the to the least general.
Speaker 1: GPUs are one step past the CPU and where it's
Speaker 1: like it's still pretty flexible and you can, you know,
Speaker 1: you can make it do a lot of things, but
Speaker 1: it's not like so but it's a lot faster, but
Speaker 1: it's not so inflexible that it's like a pain to
Speaker 1: write for. And so that's kind of they're been they're
Speaker 1: huge benefits. So as the original use of a GPU
Speaker 1: is essentially to make all the pixels on your screen
Speaker 1: in parallel, and and that's really hard because you have
Speaker 1: to do it all at the same time. And so
Speaker 1: whenever you hear about paralyzation and that, GPUs are like
Speaker 1: these super parallel engines that are really good at calculating
Speaker 1: everything at the same time. And so the reason why
Speaker 1: that's so important is like a I actually happens to
Speaker 1: be that kind of that same use set almost identically
Speaker 1: UM and so they have this huge ecosystem and they're like, hey, well,
Speaker 1: why don't you use your all your AI things and
Speaker 1: we'll speed up with this GPU. And it's very easy
Speaker 1: to use, and so that's been their huge they're huge
Speaker 1: step is that it's much better than the CPU. It's
Speaker 1: extremely easy to program and and they've they've started to
Speaker 1: add a lot of software demos and and so they're
Speaker 1: kind of in some ways, what what Navidio is doing
Speaker 1: is that they're they're also making their own ecosystem, but
Speaker 1: instead of starting with the software and moving down like
Speaker 1: let's say Apple, they're starting with the hardware and trying
Speaker 1: to move up. And GPUs are, by the way specialized
Speaker 1: they are. They are less. They're less specialized than a
Speaker 1: six or an I P or what you know, all
Speaker 1: the other really really specific things that just do one
Speaker 1: thing really well. They can do multiple things pretty well,
Speaker 1: but um, they are obviously more specialized than a CPU
Speaker 1: that can do everything. You know, kind of Okay, So
Speaker 1: that's that's been their big role, and they've really taken
Speaker 1: a lot of share as as things have started to
Speaker 1: specialized a little bit. They're they're the they're there like
Speaker 1: the easiest first step, if it makes sense. But I
Speaker 1: have one more question. So you know, for a long time,
Speaker 1: I feel like, and correct me if I'm wrong, but
Speaker 1: I feel like the semiconductor industry for like decades was
Speaker 1: sort of like a cyclical industry, and you'd have these
Speaker 1: sort of it's almost like manufacturing or like an industrial thing,
Speaker 1: and you have these up cycles when there was growth,
Speaker 1: and then you'd have like an inventory correction and the
Speaker 1: foundries and the chip companies have made too many chips,
Speaker 1: and then they'd have to cut prices or d stock
Speaker 1: and they'd go into a downturn and so forth. And
Speaker 1: then it feels like in the last several years, maybe
Speaker 1: five years, ten years, I don't know, it has stopped
Speaker 1: being a cyclical industry and become more secular. And and
Speaker 1: that is as chips get put into more and more
Speaker 1: things and phones and all kinds of different stuff. So
Speaker 1: it's like less of an up and down cycle and
Speaker 1: more just like a sort of growth industry. A Is
Speaker 1: that true? Is my perception correct? And be? Is there
Speaker 1: any slow down on the horizon for the world's overall
Speaker 1: demands for chips or do we just keep finding new
Speaker 1: places and new new places to put them in, new
Speaker 1: needs for them. Um? So yes, historically it was a
Speaker 1: crazy cyclical industry. If you guys have ever read um
Speaker 1: the Innovators what I'm dilemma, Yeah, innovatives sylemma. The case
Speaker 1: studies he uses is almost all semi conductor bunnies because
Speaker 1: they're so cyclical and they're they're like constantly you know,
Speaker 1: you know, destroying each other's modes, and they're you know,
Speaker 1: they're they're innovating and then you know, growing up and
Speaker 1: then they're dying like it's it's chaoss um. Things have
Speaker 1: definitely changed a little bit since those days, and so
Speaker 1: one of the largest markets that really dictates the cycklicality
Speaker 1: of all the semiconductor and UM markets is memory, and
Speaker 1: there's been this thesis that UM it's become a lot
Speaker 1: more consolidated, meaning that there's like I think there used
Speaker 1: to be you know, tens of players. There's like three
Speaker 1: for DRAM, which is a type of memory, and five
Speaker 1: for nand five to six or whatever. And so that's
Speaker 1: on one hand, that's that's dampen the cycklicality. And pretty
Speaker 1: much they used to do they used to do the
Speaker 1: races bottom thing where um, whenever things would go down,
Speaker 1: they would just add more supply and then everyone would
Speaker 1: would bankrupt together kind of like shale is to some
Speaker 1: extent or or does. And and they've done less of that,
Speaker 1: and that's been one one thing that's dampened the cycklicality. UM.
Speaker 1: But I think going forward, it seems like there's more
Speaker 1: end markets than ever. In the past. It was really
Speaker 1: just like PCs, right, and then phones became well PCs,
Speaker 1: and and there's some like some industrial and like you know, aerospace,
Speaker 1: and there's always been small markets, but for the most
Speaker 1: part it was just the PC market. And then phones
Speaker 1: became a thing, and then so now became PC and mobile.
Speaker 1: And now it seems like auto is becoming a thing.
Speaker 1: So auto is this new third third market, and so
Speaker 1: it's industrial IoT stuff, which I keep hearing about, but
Speaker 1: I'm always confused about how the semiconductors work into it.
Speaker 1: And then um, the AI market in itself will probably
Speaker 1: become so demand intensive from the cloud, from the cloud
Speaker 1: customers that they'll have their own end cycle. And so
Speaker 1: there's each of these markets have their own cycles to
Speaker 1: to their own extent, but together all the demand is
Speaker 1: starting to like overlap and make it a lot more smooth,
Speaker 1: if that makes sense. To be fair, the market is
Speaker 1: still cyclical, it will always be. It will always probably
Speaker 1: be cyclical, but I think all the demand aspects are
Speaker 1: really pulling things forward, and at least in the near term,
Speaker 1: I think next year seems really well positioned. Like, for example,
Speaker 1: they're saying, like this huge influx of auto demand in China,
Speaker 1: They're like, well, we can't really make it because we're
Speaker 1: we're struggling with semiconductor capacity. That's the headline that came
Speaker 1: out in the last few days. And I think that means,
Speaker 1: you know, that's kind of a sign of of all
Speaker 1: the new things that semiconductors have become a part of,
Speaker 1: not just your PC, but your car, but you're you know,
Speaker 1: your nests, thermostat all the other things in the world
Speaker 1: that you use. So can I just ask one follow
Speaker 1: up on what you just said. You said someone came
Speaker 1: out and was talking about Chinese car production like ramping up.
Speaker 1: Who who was that and that they couldn't make all
Speaker 1: the chips needed for it. It was Volkswagen. Volkswagen. Okay,
Speaker 1: thank you, Sorry, I just wanted to look it up
Speaker 1: after this. Yeah, yeah, I want to say it was
Speaker 1: a Reuter's article, but it pretty much was like, hey,
Speaker 1: semicoucter manufacturers can add capacity because it's like so, I mean,
Speaker 1: that's really interesting, and like like auto constantly is just
Speaker 1: called out as this market that's going to be this
Speaker 1: huge thing, and it is obviously a very big market.
Speaker 1: But like if we're really going down the route of
Speaker 1: EV stuff like hardcore, you know we can we can
Speaker 1: you know, no comment on the ev s back bubble
Speaker 1: or whatever, then there's gonna be a lot of more
Speaker 1: semi connects. Right, It's it's like almost completely digital. Now.
Speaker 1: That was fantastic. You're you're great at explaining this and
Speaker 1: really appreciate you making your public non anonymous debut on
Speaker 1: Odd Lots and I learned a lot to Thanks for
Speaker 1: coming up. Thanks man, I really enjoyed it. So, Tracy,
Speaker 1: are are you cool now to change the focus of
Speaker 1: our podcast on a permanent basis. I don't think I'm
Speaker 1: quite there yet. I admit that semiconductors are a lot interesting. Um,
Speaker 1: then perhaps I gave them credit for before we've recorded
Speaker 1: these two episodes. But yeah, I don't think I want
Speaker 1: to do all thoughts um Comma Semiconductor Specialists just yet.
Speaker 1: Well I was gonna say, maybe, like when we're a
Speaker 1: gigantic media brand in our own right, we could do
Speaker 1: like a spinoff show, The Semiconductor Vertical. Yeah, the semi
Speaker 1: Conductor Vertical excellent. Um. What I was gonna say is
Speaker 1: I'm quite interested in possibly looking at one of those
Speaker 1: Apple UM and one computers at some point. Yeah. I
Speaker 1: don't think we intended for this episode to be a
Speaker 1: giant advertisement for Apple snow chip, but a lot of
Speaker 1: people are excited about it, and it was really interesting
Speaker 1: listening to Doug go into some of the technical details
Speaker 1: about why exactly it's considered such a new thing. Yeah. No,
Speaker 1: I thought that was super interesting as well. Um, I
Speaker 1: feel like the next one we do in our series,
Speaker 1: we should do like at t s MC focus for sure. Yeah,
Speaker 1: let's do that. Like I feel like, you know, like
Speaker 1: we've done until this sort of a sort of a
Speaker 1: little more Apple heavy all the everyone. But it feels
Speaker 1: like t SMC is just like such a fascinating story
Speaker 1: and it's own right, combining their sort of tech prowess
Speaker 1: and geopolitical significance. That that that's that whenever we do
Speaker 1: our next trip episode, let's do it on that agreed,
Speaker 1: all right? Should we leave it there? Yeah, let's leave
Speaker 1: it there. Okay. This has been another episode of the
Speaker 1: All Thoughts podcast. I'm Tracy Alloway. You can follow me
Speaker 1: on Twitter at Tracy Alloway. And I'm Joe Wisenthal. You
Speaker 1: can follow me on Twitter at the Stalwart. Follow our
Speaker 1: guest Doug Laucelin on Twitter. He's under the handle at
Speaker 1: full All the Time. Also be sure to check out
Speaker 1: his newsletter Mules Musing. Follow our producer Laura Carlson at
Speaker 1: Laura M. Carlson. Follow the Bloomberg head of podcast, Francesco
Speaker 1: Levi at Francisco Today, and check out all of our
Speaker 1: podcasts at Bloomberg under the handle at podcast, Thanks for listening,