1 00:00:10,840 --> 00:00:14,320 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:14,360 --> 00:00:18,640 Speaker 1: I'm Joe Wisn't Thal and I'm Tracy Away so trazy 3 00:00:18,800 --> 00:00:21,400 Speaker 1: you know. A long time ago. Now it feels like 4 00:00:21,760 --> 00:00:23,959 Speaker 1: we had the joke about, well, should we just turn 5 00:00:24,040 --> 00:00:28,960 Speaker 1: this into a semiconductor podcast? Yes? Yes, and you've you've 6 00:00:28,960 --> 00:00:32,560 Speaker 1: really run with that joke. Okay, Well, the thing is 7 00:00:32,560 --> 00:00:35,280 Speaker 1: is we keep we can't escape it, like we keep thinking, 8 00:00:35,280 --> 00:00:37,959 Speaker 1: like you know, we like first started talking about it's like, oh, 9 00:00:38,120 --> 00:00:40,720 Speaker 1: this is like an interesting topic for ries. But it 10 00:00:40,760 --> 00:00:44,240 Speaker 1: turns out, little did we know when we first started 11 00:00:44,440 --> 00:00:47,199 Speaker 1: covering this story on the podcast, which I think was 12 00:00:47,200 --> 00:00:51,320 Speaker 1: the last October or last November, that actually you would 13 00:00:51,760 --> 00:00:56,680 Speaker 1: blow up into this huge issue semiconductor manufacturing that became, 14 00:00:56,720 --> 00:00:59,360 Speaker 1: like I sent, a national topic of national news far 15 00:00:59,400 --> 00:01:04,480 Speaker 1: outside sort of like the niche audience, right, semiconductors secretly 16 00:01:04,880 --> 00:01:08,920 Speaker 1: rule all our lives. And I'm joking obviously, but nowadays 17 00:01:08,920 --> 00:01:11,440 Speaker 1: everything is so high tech that there are a lot 18 00:01:11,520 --> 00:01:14,360 Speaker 1: of appliances that you wouldn't necessarily think of that have 19 00:01:14,959 --> 00:01:19,200 Speaker 1: chips in them. Um, So smartphones, computers, things like that obviously, 20 00:01:19,280 --> 00:01:23,800 Speaker 1: but also lots of cars um And I saw one 21 00:01:23,920 --> 00:01:26,200 Speaker 1: headline float by I haven't had a chance to read 22 00:01:26,240 --> 00:01:30,400 Speaker 1: it yet, but something about aluminum producers warning of a 23 00:01:30,480 --> 00:01:33,919 Speaker 1: downturn because of a chip shortage as well. So chips 24 00:01:33,920 --> 00:01:37,640 Speaker 1: are everywhere, and I think we're really starting to realize 25 00:01:37,680 --> 00:01:42,560 Speaker 1: how important they are, and also how important chip makers are, 26 00:01:42,600 --> 00:01:45,160 Speaker 1: and of course, as we've been discussing, there's a limited 27 00:01:45,240 --> 00:01:48,840 Speaker 1: number of those, right, And so anyone who sort of 28 00:01:48,840 --> 00:01:51,600 Speaker 1: listened to our series we started talking about the decline 29 00:01:51,600 --> 00:01:55,760 Speaker 1: of Intel. We talked about why US manufacturing and generally 30 00:01:55,880 --> 00:01:58,840 Speaker 1: sort of gone away, and we talked, of course about 31 00:01:59,200 --> 00:02:03,680 Speaker 1: the dominant role of Taiwan Semi and it's like almost 32 00:02:03,720 --> 00:02:06,080 Speaker 1: like again it was not intentional, but now there's like 33 00:02:06,120 --> 00:02:08,240 Speaker 1: this huge thing and everyone is waking up to how 34 00:02:08,280 --> 00:02:11,320 Speaker 1: dependent we all are on Taiwan Semi Conductor and a 35 00:02:11,360 --> 00:02:15,560 Speaker 1: few other major fabs, and it's a it's become a 36 00:02:15,639 --> 00:02:18,720 Speaker 1: legit U S national security question, and we know the 37 00:02:18,760 --> 00:02:22,280 Speaker 1: Biden administration is looking at it and you know, looking 38 00:02:22,320 --> 00:02:26,560 Speaker 1: at different ways to reduce US dependent. So we really 39 00:02:26,639 --> 00:02:29,600 Speaker 1: can't get away from this story. And obviously we're gonna 40 00:02:29,600 --> 00:02:31,959 Speaker 1: be talking about it again today and I bet it 41 00:02:32,000 --> 00:02:33,760 Speaker 1: won't even be the last time we talked about it. 42 00:02:34,840 --> 00:02:38,600 Speaker 1: I think he might be right on that one. So, uh, well, 43 00:02:38,639 --> 00:02:40,760 Speaker 1: I'm really excited because actually we're going to be uh 44 00:02:40,960 --> 00:02:44,360 Speaker 1: going back to our very first guest who gave a 45 00:02:44,400 --> 00:02:47,280 Speaker 1: sort of great overview of some of the best clear 46 00:02:47,280 --> 00:02:52,840 Speaker 1: English descriptions of the challenges of chip manufacturing, and uh, 47 00:02:52,880 --> 00:02:54,600 Speaker 1: it was the first one. Everyone should go back and 48 00:02:54,639 --> 00:02:57,120 Speaker 1: listen to that one. We're then talking about the decline 49 00:02:57,120 --> 00:02:59,600 Speaker 1: of Intel, but we're gonna zoom out a little bit 50 00:02:59,639 --> 00:03:02,919 Speaker 1: and get the acute shortage that the world is facing 51 00:03:03,080 --> 00:03:06,960 Speaker 1: right now. Why are so many companies struggling with their 52 00:03:06,960 --> 00:03:10,520 Speaker 1: ability to source chips? And then the longer term issue 53 00:03:10,760 --> 00:03:13,720 Speaker 1: of this is scarce. The capacity is scarce, and even 54 00:03:13,760 --> 00:03:16,280 Speaker 1: if we get through this current phase, there is going 55 00:03:16,320 --> 00:03:19,240 Speaker 1: to be still this sort of perhaps a dangerous over 56 00:03:19,320 --> 00:03:23,600 Speaker 1: reliance on a few manufacturers that are capacity limited. So 57 00:03:24,040 --> 00:03:27,400 Speaker 1: very excited we're going to be speaking again second time 58 00:03:27,400 --> 00:03:31,520 Speaker 1: on the show. Stacy Raskin his managing director, Senior analyst 59 00:03:31,760 --> 00:03:35,880 Speaker 1: U S Semi Conductors at Bernstein Research. Uh, Stacy, thank 60 00:03:35,920 --> 00:03:38,880 Speaker 1: you so much for coming back on out lot. That's 61 00:03:38,920 --> 00:03:40,960 Speaker 1: fantastic to be back. Thank you for having me again. 62 00:03:41,200 --> 00:03:43,240 Speaker 1: What's it like I mean, you know, you're like a 63 00:03:43,280 --> 00:03:46,280 Speaker 1: star now because at one point semi conductors were just 64 00:03:46,320 --> 00:03:49,920 Speaker 1: like this thing that maybe investors mostly cared about. But 65 00:03:50,040 --> 00:03:52,240 Speaker 1: it really does feel like, you know, correct me if 66 00:03:52,240 --> 00:03:53,520 Speaker 1: I'm wrong, but it really does feel like in the 67 00:03:53,600 --> 00:03:57,080 Speaker 1: last few months, everybody is now obsessed with this story. 68 00:03:57,120 --> 00:03:58,880 Speaker 1: Uh you know, I think I may have mentioned this 69 00:03:58,960 --> 00:04:01,240 Speaker 1: last time I was on, But that's one reason I 70 00:04:01,280 --> 00:04:04,920 Speaker 1: love this space. It's literally a ground zero for everything 71 00:04:04,960 --> 00:04:06,720 Speaker 1: that's been going on. And it's it's you know, it's 72 00:04:06,760 --> 00:04:08,360 Speaker 1: not just the last few months. It was all the 73 00:04:08,480 --> 00:04:13,760 Speaker 1: trade and the PRIs and and then the burgeoning geopolitics 74 00:04:13,800 --> 00:04:16,159 Speaker 1: and and now obviously the shortages and everything else. Like 75 00:04:16,200 --> 00:04:18,240 Speaker 1: it's and like you have to remember, I mean, like 76 00:04:18,320 --> 00:04:21,279 Speaker 1: the global electronics like enterprise. Like I mean, it's like 77 00:04:21,279 --> 00:04:24,240 Speaker 1: a four five trillion dollar industry, like worldwide. If you 78 00:04:24,279 --> 00:04:27,400 Speaker 1: add up all the PCs and and and and all 79 00:04:27,400 --> 00:04:29,919 Speaker 1: of the consumer electronics, and then all the services and 80 00:04:29,960 --> 00:04:32,840 Speaker 1: software and everything that that goes with that trillions and 81 00:04:32,880 --> 00:04:36,920 Speaker 1: trillions of dollars, and it all rests on semiconductors. Semis 82 00:04:36,920 --> 00:04:39,120 Speaker 1: are the fundament of all of that. Like, we don't 83 00:04:39,160 --> 00:04:41,400 Speaker 1: have any of that without semi conductors, and so I 84 00:04:41,480 --> 00:04:45,640 Speaker 1: think it's a phenomenal place to spend time. It's and 85 00:04:45,640 --> 00:04:47,880 Speaker 1: and it's and it's job security for me too, So 86 00:04:47,920 --> 00:04:50,160 Speaker 1: that that's a yeah, that's that's the most important thing 87 00:04:52,200 --> 00:04:54,560 Speaker 1: that helps for sure. So I guess just to begin, 88 00:04:55,000 --> 00:04:57,960 Speaker 1: maybe you could describe how bad things are at the 89 00:04:57,960 --> 00:05:00,919 Speaker 1: moment in terms of the chip choic UM. It depends 90 00:05:00,960 --> 00:05:03,840 Speaker 1: on on the market. Obviously, automotive is getting the most pressed, 91 00:05:04,320 --> 00:05:06,720 Speaker 1: and that is where the shortages are most are most acute. 92 00:05:06,720 --> 00:05:09,320 Speaker 1: Although it is they are starting to bleed into other 93 00:05:09,400 --> 00:05:12,160 Speaker 1: areas UM slowly, but they are and I think the 94 00:05:12,240 --> 00:05:13,880 Speaker 1: driver is a little bit different. Let's talk a little 95 00:05:13,880 --> 00:05:17,560 Speaker 1: bit automotive, and automotive was was sort of unique. UM. 96 00:05:18,000 --> 00:05:21,640 Speaker 1: Most end markets in SEMIS through COVID actually proved to 97 00:05:21,680 --> 00:05:26,480 Speaker 1: be fairly remarkably resilient. UM. Automotive, however, had some fairly 98 00:05:26,520 --> 00:05:28,279 Speaker 1: sizable shocks, and if you sort of look at like 99 00:05:28,839 --> 00:05:31,920 Speaker 1: end market production for off for cars in terms of 100 00:05:31,960 --> 00:05:34,920 Speaker 1: like year of year growth in the trough quarter of COVID, 101 00:05:34,960 --> 00:05:37,200 Speaker 1: it was actually worse than what we saw on the 102 00:05:37,240 --> 00:05:39,040 Speaker 1: finding and the trough court of the financial crisis. I 103 00:05:39,080 --> 00:05:41,920 Speaker 1: think in COVID the in the in in was a 104 00:05:41,960 --> 00:05:44,479 Speaker 1: que two or whenever it was or whatever month I 105 00:05:44,480 --> 00:05:46,880 Speaker 1: was like, I remember it was down or something that 106 00:05:46,880 --> 00:05:48,760 Speaker 1: in terms of production it was a lot. And then 107 00:05:48,760 --> 00:05:51,839 Speaker 1: it's obviously production snap back faster than the financial crisis, 108 00:05:51,880 --> 00:05:54,880 Speaker 1: but it was it was a very big hit. Part 109 00:05:54,880 --> 00:05:57,279 Speaker 1: of that was obviously because of of supply. So we 110 00:05:57,320 --> 00:05:59,120 Speaker 1: have a lot of auto plants that are in obviously 111 00:05:59,120 --> 00:06:01,359 Speaker 1: in places like China, but also in like the US 112 00:06:01,400 --> 00:06:04,400 Speaker 1: and Europe, and they were all shut down with the 113 00:06:04,440 --> 00:06:07,240 Speaker 1: early lockdowns. And then there was a demand shock as well, 114 00:06:07,240 --> 00:06:09,120 Speaker 1: and people were trapped in their houses and they weren't 115 00:06:09,200 --> 00:06:11,720 Speaker 1: driving anywhere, and autos are pretty big purchase and so 116 00:06:11,760 --> 00:06:14,320 Speaker 1: people weren't like rushing out to go by cars. And 117 00:06:14,400 --> 00:06:16,800 Speaker 1: because of that, the auto oams, I mean they kind 118 00:06:16,800 --> 00:06:19,840 Speaker 1: of in some sense did this to themselves. They went 119 00:06:19,880 --> 00:06:21,880 Speaker 1: and they canceled all the all all the orders for 120 00:06:21,920 --> 00:06:23,640 Speaker 1: all the chips and everything else that goes into this 121 00:06:23,680 --> 00:06:26,800 Speaker 1: stuff because demanded collapse. And and the problem is when 122 00:06:26,800 --> 00:06:30,240 Speaker 1: they canceled those orders for companies like you know an 123 00:06:30,320 --> 00:06:32,440 Speaker 1: n XP and in Finnian that that have their own 124 00:06:32,480 --> 00:06:35,680 Speaker 1: factories and they reduced their factory loadings, they didn't make 125 00:06:35,680 --> 00:06:38,680 Speaker 1: the parts, and you know for parts that were being 126 00:06:38,680 --> 00:06:42,159 Speaker 1: outsourced to companies like t SMC. You know, those orders, 127 00:06:42,160 --> 00:06:44,680 Speaker 1: those auto orders went away, but like other demand for 128 00:06:44,760 --> 00:06:47,839 Speaker 1: other things was so strong that capacity immediately got backfilled. 129 00:06:48,279 --> 00:06:51,840 Speaker 1: Right now, we go forward a little bit and you know, 130 00:06:52,560 --> 00:06:54,960 Speaker 1: some parts of the world, you know, even in the 131 00:06:55,080 --> 00:06:56,920 Speaker 1: US and in Europe, like the auto plans started to 132 00:06:56,960 --> 00:06:58,840 Speaker 1: open up. And then parts of the world like China, 133 00:06:59,440 --> 00:07:01,600 Speaker 1: who actually came out of COVID. You know, I guess 134 00:07:01,600 --> 00:07:03,400 Speaker 1: good for them, much better than we have in the 135 00:07:03,480 --> 00:07:06,239 Speaker 1: U S. Here, demands started to go off the charts 136 00:07:06,279 --> 00:07:09,240 Speaker 1: because you know, people they didn't want to take public transportation, 137 00:07:09,279 --> 00:07:10,720 Speaker 1: they wanted to drive, and so there's a lot of 138 00:07:10,720 --> 00:07:13,400 Speaker 1: pent up demand and everything, and so you have this 139 00:07:13,440 --> 00:07:15,840 Speaker 1: massive demand snappeck and so they all went and to 140 00:07:15,880 --> 00:07:18,120 Speaker 1: recover the orders. But the problem is you can't turn 141 00:07:18,120 --> 00:07:20,400 Speaker 1: a semiconductor factory on and off like a light switch. 142 00:07:21,280 --> 00:07:23,280 Speaker 1: Like if I if I take my factory loadings down, 143 00:07:23,280 --> 00:07:25,280 Speaker 1: if I reduce that I mean, if I start away 144 00:07:25,320 --> 00:07:27,160 Speaker 1: for a raw way for today, I don't get chips 145 00:07:27,160 --> 00:07:28,640 Speaker 1: out the other end of the factory for three or 146 00:07:28,640 --> 00:07:31,920 Speaker 1: four five months, and and this gets the last issue 147 00:07:31,920 --> 00:07:36,080 Speaker 1: of automotive. They don't run with any inventory. The auto 148 00:07:36,120 --> 00:07:38,360 Speaker 1: supply chain has tended to run much more on like 149 00:07:38,400 --> 00:07:41,200 Speaker 1: a just in time kind of kind of inventory management, 150 00:07:41,760 --> 00:07:43,600 Speaker 1: not just for semis, but like across the board. So 151 00:07:43,640 --> 00:07:46,200 Speaker 1: there's not a lot of slack in the system. And 152 00:07:46,240 --> 00:07:48,600 Speaker 1: so now they're coming back like hat in hand they 153 00:07:48,640 --> 00:07:50,840 Speaker 1: want said there there's just no parts. It's just gonna 154 00:07:50,840 --> 00:07:53,920 Speaker 1: take time to build them. And so this is problematic, 155 00:07:53,920 --> 00:07:56,440 Speaker 1: and this is why we're seeing the effects to the 156 00:07:56,480 --> 00:07:58,480 Speaker 1: degree that we are in automotive. Do it just to 157 00:07:58,480 --> 00:08:00,320 Speaker 1: be clear when you say the effects that we're seeing 158 00:08:00,320 --> 00:08:02,520 Speaker 1: to the degree that they are. I know, I think 159 00:08:02,560 --> 00:08:04,680 Speaker 1: these stories have really emerged over the last month and 160 00:08:04,720 --> 00:08:07,680 Speaker 1: a half or so. What do you put into context 161 00:08:08,000 --> 00:08:11,240 Speaker 1: how big of a problem this is for the industry? Well, 162 00:08:11,440 --> 00:08:14,000 Speaker 1: I mean, I just just came out with their forecast. 163 00:08:14,040 --> 00:08:16,320 Speaker 1: They think the Q one we're gonna lose close to 164 00:08:16,360 --> 00:08:19,920 Speaker 1: a million cars in terms of production levels, right, which 165 00:08:19,960 --> 00:08:21,800 Speaker 1: is what I mean? You figure the industry and what's 166 00:08:21,800 --> 00:08:24,880 Speaker 1: the typical like um uh, sometimes you'll hear me say 167 00:08:24,880 --> 00:08:28,400 Speaker 1: star the stars is a people refer to that, um 168 00:08:28,440 --> 00:08:30,240 Speaker 1: it's it's an acronym but it basically means like how 169 00:08:30,240 --> 00:08:32,400 Speaker 1: many cars are they gonna sell? They are seasonally adjusted 170 00:08:32,400 --> 00:08:34,400 Speaker 1: at annual rate, I think is what it stands for. 171 00:08:34,400 --> 00:08:37,920 Speaker 1: For for for for car sales, UM. You know, normal 172 00:08:38,040 --> 00:08:40,679 Speaker 1: stars at a ballpark, ninety million cars a year get 173 00:08:40,720 --> 00:08:43,280 Speaker 1: built something like that, UM. And so we've got a 174 00:08:43,320 --> 00:08:45,840 Speaker 1: million in one quarter. I mean, it's it's it's a 175 00:08:45,880 --> 00:08:48,199 Speaker 1: decent amount of cars that are missing. Hopefully those will 176 00:08:48,200 --> 00:08:49,920 Speaker 1: get those will get built later on in the year. 177 00:08:50,080 --> 00:08:52,079 Speaker 1: You know, hopefully you can argue that demand will stick 178 00:08:52,080 --> 00:08:53,840 Speaker 1: around it for now. That's the kind of impact and 179 00:08:53,840 --> 00:08:56,280 Speaker 1: you can, i mean make a price assumption for what 180 00:08:56,320 --> 00:08:57,880 Speaker 1: a car sells for and that's what it tells you 181 00:08:57,960 --> 00:09:00,760 Speaker 1: from from an autoo em stamp and how much revenue 182 00:09:00,800 --> 00:09:02,920 Speaker 1: they're they're losing. You know, GM and Ford have put 183 00:09:02,920 --> 00:09:05,240 Speaker 1: out some numbers UM, and it's in you know, it's 184 00:09:05,240 --> 00:09:08,120 Speaker 1: in the multiple billions of dollars in terms of many 185 00:09:08,120 --> 00:09:10,280 Speaker 1: billions of dollars of law sales at least for now 186 00:09:11,160 --> 00:09:13,640 Speaker 1: that that that's that's impacted in the auto supply chain. Now, 187 00:09:13,640 --> 00:09:17,280 Speaker 1: in terms of the auto semi suppliers, they're actually a 188 00:09:17,280 --> 00:09:18,760 Speaker 1: really good place because if you sort of look at 189 00:09:18,760 --> 00:09:22,360 Speaker 1: these dynamics, it also suggests that the auto recovery from 190 00:09:22,360 --> 00:09:25,480 Speaker 1: a semi standpoint has some legs to it. The reason 191 00:09:25,520 --> 00:09:27,240 Speaker 1: there's and there's a number of reasons. One is obviously 192 00:09:27,240 --> 00:09:29,679 Speaker 1: there's there's just selling everything that they can possibly make 193 00:09:29,760 --> 00:09:32,120 Speaker 1: right now. The the the channel is bone dry, there 194 00:09:32,160 --> 00:09:35,800 Speaker 1: are no parts, and so everything that the semi guys 195 00:09:35,840 --> 00:09:38,240 Speaker 1: can possibly make is getting shipped and it's getting put 196 00:09:38,280 --> 00:09:41,000 Speaker 1: into a car, and they're ramping their production levels up, 197 00:09:41,040 --> 00:09:43,200 Speaker 1: and so that will carry on for a while and 198 00:09:43,240 --> 00:09:46,600 Speaker 1: you're not just like going to set eventually to UM 199 00:09:46,720 --> 00:09:48,520 Speaker 1: to go into a car. You also need to refill 200 00:09:48,559 --> 00:09:51,640 Speaker 1: the channel somewhat. And then longer term, it is highly 201 00:09:51,720 --> 00:09:54,080 Speaker 1: likely in my opinion that the auto supply chain may 202 00:09:54,120 --> 00:09:57,400 Speaker 1: be rethinking this whole just in time inventory management. And 203 00:09:57,440 --> 00:09:59,920 Speaker 1: so if they need to run with higher levels of 204 00:10:00,000 --> 00:10:03,360 Speaker 1: offer inventory UM, that will be an additional layer on 205 00:10:03,440 --> 00:10:05,360 Speaker 1: top of everything else that will need to be shipped 206 00:10:05,400 --> 00:10:07,200 Speaker 1: to to to build that that level of parts up. 207 00:10:07,200 --> 00:10:09,440 Speaker 1: Since that's good, and then if you just look at 208 00:10:09,480 --> 00:10:12,160 Speaker 1: the overall level of the recovery, we're still early in 209 00:10:12,200 --> 00:10:14,040 Speaker 1: the unit recovery in general. If I look at like 210 00:10:14,080 --> 00:10:16,600 Speaker 1: the I H. S forecast for autos. I think the 211 00:10:16,720 --> 00:10:21,520 Speaker 1: Auto star was down. I think the current forecast at 212 00:10:21,600 --> 00:10:23,080 Speaker 1: least like from I h S have it up like 213 00:10:23,120 --> 00:10:26,959 Speaker 1: fourteen percent year over year, but at levels that are 214 00:10:27,000 --> 00:10:30,120 Speaker 1: still below pre COVID levels. And I can make the 215 00:10:30,240 --> 00:10:33,079 Speaker 1: argument that post COVID, maybe auto demand in general will 216 00:10:33,120 --> 00:10:36,000 Speaker 1: be higher. You know again, maybe people will want to 217 00:10:36,080 --> 00:10:39,160 Speaker 1: drive more and and everything else, and so like, I 218 00:10:39,200 --> 00:10:41,240 Speaker 1: can make the argument from from the semiconductor side of 219 00:10:41,280 --> 00:10:43,960 Speaker 1: things that this has some legs, but we're gonna we 220 00:10:44,080 --> 00:10:45,559 Speaker 1: have to see how this works out. We're gonna get 221 00:10:45,559 --> 00:10:48,120 Speaker 1: more disruption. Obviously, these guys are all trying to to 222 00:10:48,120 --> 00:10:50,079 Speaker 1: to build this up. But you have to remember the 223 00:10:50,320 --> 00:10:53,120 Speaker 1: other problem with cars is there's a ton of semiconductors 224 00:10:53,160 --> 00:10:55,640 Speaker 1: in them, and they come from all over the place, 225 00:10:56,880 --> 00:10:58,839 Speaker 1: and you need all of them. You need the full 226 00:10:58,920 --> 00:11:01,040 Speaker 1: kit before you can build the car. I'll make it up. 227 00:11:01,040 --> 00:11:04,920 Speaker 1: But if you're building a fifty automobile, if I'm short 228 00:11:05,000 --> 00:11:08,080 Speaker 1: the one two dollar micro controller that goes into you know, 229 00:11:08,160 --> 00:11:10,520 Speaker 1: into the into the driver's seat of with the motor 230 00:11:10,559 --> 00:11:13,160 Speaker 1: to make the seat go back and forth, if I 231 00:11:13,200 --> 00:11:15,640 Speaker 1: can't get that one part, I can't build the car. 232 00:11:15,840 --> 00:11:18,480 Speaker 1: I need, I need everything. And so if you you 233 00:11:18,559 --> 00:11:20,680 Speaker 1: love some companies that sort of start to correct like 234 00:11:20,760 --> 00:11:24,360 Speaker 1: faster than others maybe, but in general, everybody, the whole 235 00:11:24,360 --> 00:11:26,200 Speaker 1: supply chain kind of has to get back into balance 236 00:11:26,240 --> 00:11:28,400 Speaker 1: before things can really be smooth again. That's that's gonna 237 00:11:28,440 --> 00:11:30,840 Speaker 1: take a while, but from it, it's it's probably a 238 00:11:30,840 --> 00:11:34,559 Speaker 1: good thing to be an auto semi vendor right now. So, 239 00:11:34,640 --> 00:11:38,640 Speaker 1: I mean, what's coming through from those conversations that cars 240 00:11:38,679 --> 00:11:41,520 Speaker 1: are clearly the most affected. And this brings me to 241 00:11:41,559 --> 00:11:43,920 Speaker 1: a question that I've been wanting to ask for a while. 242 00:11:44,040 --> 00:11:49,560 Speaker 1: But given we have an overwhelming demand for chips versus 243 00:11:49,640 --> 00:11:54,720 Speaker 1: available supply, how do chip makers actually decide to allocate 244 00:11:54,960 --> 00:11:57,360 Speaker 1: their orders? So I imagine if they get an order 245 00:11:57,440 --> 00:12:01,600 Speaker 1: from Sea Apple for a million chips, that's probably going 246 00:12:01,640 --> 00:12:05,240 Speaker 1: to be treated differently to an order from um Ford 247 00:12:05,520 --> 00:12:08,319 Speaker 1: or something like that. Yeah, and it depends. And so 248 00:12:08,360 --> 00:12:10,600 Speaker 1: there again, there's two mechanisms. We may have talked about 249 00:12:10,600 --> 00:12:13,000 Speaker 1: this a little bit last time. Two mechanisms that the 250 00:12:13,040 --> 00:12:15,080 Speaker 1: industry uses to make chips. So one is, like I said, 251 00:12:15,080 --> 00:12:17,800 Speaker 1: it's called an i d M model Integrated device manufacturer. 252 00:12:17,840 --> 00:12:19,920 Speaker 1: These are companies that that that make their own chips, 253 00:12:21,000 --> 00:12:23,640 Speaker 1: and then there's companies that that outsourced production to come 254 00:12:23,760 --> 00:12:25,520 Speaker 1: to to what's called a foundry. This is a company 255 00:12:25,520 --> 00:12:28,679 Speaker 1: like TCC in Taiwan, right, Uh. And some companies split 256 00:12:28,720 --> 00:12:31,080 Speaker 1: the difference, like you know n XP they make a 257 00:12:31,080 --> 00:12:33,200 Speaker 1: bunch of stuff in the house and then the outsource 258 00:12:33,240 --> 00:12:35,719 Speaker 1: depending on on what it is. So in some cases, um, 259 00:12:35,760 --> 00:12:38,439 Speaker 1: they've got a mixed they've got a mixed model. I 260 00:12:38,480 --> 00:12:41,640 Speaker 1: guess what you're referring to primarily is probably the foundry 261 00:12:41,679 --> 00:12:43,720 Speaker 1: model because they're like t SMC, is is a company 262 00:12:43,760 --> 00:12:46,760 Speaker 1: that makes products for everybody across every end market. Right. 263 00:12:47,200 --> 00:12:49,240 Speaker 1: This is another problem at least with auto. Auto is 264 00:12:49,280 --> 00:12:51,839 Speaker 1: a very small piece of t SMC's business even in 265 00:12:51,880 --> 00:12:53,480 Speaker 1: a in a normal year, it's like four percent of 266 00:12:53,480 --> 00:12:56,480 Speaker 1: their revenues, and so it went down to like two 267 00:12:56,960 --> 00:12:59,440 Speaker 1: in because, like I said, when they canceled those orders, 268 00:12:59,520 --> 00:13:03,080 Speaker 1: like other other people backfill them, and like every everybody 269 00:13:03,080 --> 00:13:05,320 Speaker 1: went bananas obviously over this. You know, we were seeing 270 00:13:05,320 --> 00:13:07,079 Speaker 1: you know, like Germany and like all these other companies 271 00:13:07,080 --> 00:13:08,760 Speaker 1: they were trying to put pressure on t SMC. But 272 00:13:08,800 --> 00:13:10,760 Speaker 1: I mean, at the end of the day, like auto 273 00:13:10,920 --> 00:13:13,000 Speaker 1: is not a very important market for t SMC it's 274 00:13:13,040 --> 00:13:15,280 Speaker 1: actually very small. So I mean it's quite obvious they're 275 00:13:15,280 --> 00:13:19,480 Speaker 1: gonna obviously prioritize like higher volume stuff, especially if it's there. 276 00:13:19,640 --> 00:13:21,679 Speaker 1: We're actually hearing now that that they may be starting 277 00:13:21,720 --> 00:13:23,520 Speaker 1: to push some of these auto orders like through the 278 00:13:23,559 --> 00:13:25,320 Speaker 1: fab faster now to try to make up for this, 279 00:13:25,480 --> 00:13:28,240 Speaker 1: and they can't do that. But you disrupt others. You've 280 00:13:28,240 --> 00:13:30,880 Speaker 1: got to push other guys aside, and so it costs money, 281 00:13:30,880 --> 00:13:33,920 Speaker 1: typically cost extra. So we'll see um what that means. 282 00:13:33,960 --> 00:13:36,120 Speaker 1: But yeah, I mean in general, I mean you you order, 283 00:13:36,720 --> 00:13:38,480 Speaker 1: at least at the foundry, like you put your orders 284 00:13:38,480 --> 00:13:40,840 Speaker 1: and you order a certain amount of wafers, a certain 285 00:13:40,880 --> 00:13:43,880 Speaker 1: amount of capacity. It it depends on the relationship. If 286 00:13:43,920 --> 00:13:46,120 Speaker 1: it's a big order and you've got a long relationship, yeah, 287 00:13:46,160 --> 00:13:49,760 Speaker 1: you'll probably get prioritized. If you're small. And again, you know, 288 00:13:49,880 --> 00:13:51,680 Speaker 1: if a lot of this stuff, maybe the volumes aren't 289 00:13:51,679 --> 00:13:53,920 Speaker 1: that high, I mean that that becomes problematic, especially if 290 00:13:53,920 --> 00:13:55,719 Speaker 1: you give up those of those capacity slots, and that's 291 00:13:55,760 --> 00:13:57,800 Speaker 1: that's what these guys did when they gave them up. Well, 292 00:13:58,000 --> 00:14:02,440 Speaker 1: can you explain that a little bit further. How commoditized 293 00:14:02,520 --> 00:14:07,440 Speaker 1: I guess is the production capacity such that Okay, the 294 00:14:07,480 --> 00:14:10,400 Speaker 1: automakers canceled their orders in the spring when it looked 295 00:14:10,440 --> 00:14:12,240 Speaker 1: like the industry was collapsing, or at least there was 296 00:14:12,280 --> 00:14:17,360 Speaker 1: this lull. How translatable is one type of chip capacity 297 00:14:17,720 --> 00:14:20,160 Speaker 1: to another such that they could just build the slot 298 00:14:20,480 --> 00:14:23,160 Speaker 1: with a totally different kind of customer, I guess. I 299 00:14:23,160 --> 00:14:25,280 Speaker 1: mean at t SMC, it's it's fungible on a process 300 00:14:25,320 --> 00:14:28,560 Speaker 1: by process basis. So I mean we're talking like you know, 301 00:14:28,600 --> 00:14:31,280 Speaker 1: I'll make it up if it's you know, and if 302 00:14:31,280 --> 00:14:33,440 Speaker 1: there's something leading edge, it was some sort of advanced 303 00:14:33,480 --> 00:14:35,920 Speaker 1: processor that goes into the infotainment and in the car 304 00:14:36,000 --> 00:14:37,680 Speaker 1: or something maybe that's being made at t SMC on 305 00:14:37,760 --> 00:14:41,080 Speaker 1: like their seven animeter like that gets canceled up. I 306 00:14:41,080 --> 00:14:43,280 Speaker 1: mean like like like media tackle snap that up in 307 00:14:43,320 --> 00:14:45,200 Speaker 1: a heartbeat. Right for the smartphone, it's the same process, 308 00:14:45,240 --> 00:14:48,400 Speaker 1: different chip and same process on a more lagging edge thing, 309 00:14:48,440 --> 00:14:50,840 Speaker 1: you know, analog. I mean, because the other thing is there. 310 00:14:50,840 --> 00:14:53,240 Speaker 1: There's been a very strong like eneneral like industrial demand, 311 00:14:53,320 --> 00:14:56,320 Speaker 1: and so even on mature node stuff, if that capacity 312 00:14:56,320 --> 00:14:58,680 Speaker 1: opens up, it's it's it's available. And like at t SMC, 313 00:14:58,760 --> 00:15:01,280 Speaker 1: I mean you're basically booking is it a certain process 314 00:15:02,320 --> 00:15:04,480 Speaker 1: mostly and and you know it's in some sense it 315 00:15:04,560 --> 00:15:06,960 Speaker 1: is fungible. It depends on the product. There are some 316 00:15:07,000 --> 00:15:11,160 Speaker 1: products that are used more specialized manufacturing, more specialized materials 317 00:15:11,200 --> 00:15:13,520 Speaker 1: or structures, and that may be less so, but by 318 00:15:13,520 --> 00:15:16,360 Speaker 1: and large, I mean, especially for the stuff that's being outsourced. Yeah, 319 00:15:16,400 --> 00:15:19,440 Speaker 1: that capacity is available. That's that's t SMC's business model, 320 00:15:19,480 --> 00:15:36,560 Speaker 1: that's what they do. So Stacy, you mentioned the idea 321 00:15:36,920 --> 00:15:39,880 Speaker 1: that the chip shortage is bad enough that maybe it's 322 00:15:39,880 --> 00:15:43,360 Speaker 1: going to encourage car companies to rethink the way they're 323 00:15:43,400 --> 00:15:47,360 Speaker 1: actually ordering and stop piling all these chips. I guess 324 00:15:47,880 --> 00:15:51,280 Speaker 1: the other big question is will it be enough to 325 00:15:52,000 --> 00:15:57,080 Speaker 1: encourage the factories themselves to try to expand supply in 326 00:15:57,080 --> 00:15:59,680 Speaker 1: a meaningful way or can they actually do it? And 327 00:15:59,720 --> 00:16:03,920 Speaker 1: also it will it encourage efforts by governments to build 328 00:16:03,960 --> 00:16:08,040 Speaker 1: their own sort of independent supply of chips. Yeah, well 329 00:16:08,040 --> 00:16:10,560 Speaker 1: that's your to your second question. That's already happening, and 330 00:16:10,560 --> 00:16:13,680 Speaker 1: we can address that. And um, there's there's a whole 331 00:16:13,720 --> 00:16:16,920 Speaker 1: thing around um trying to bring more to diversify the 332 00:16:16,920 --> 00:16:19,360 Speaker 1: manufacturing supply chain and bring more back and back on house. 333 00:16:19,360 --> 00:16:21,320 Speaker 1: And you guys have talked about this in other semi 334 00:16:21,360 --> 00:16:24,120 Speaker 1: conductor odd lots the whole you know, full dependence on 335 00:16:24,160 --> 00:16:27,200 Speaker 1: Taiwan and everything. So that's going on. Anyways, We've actually 336 00:16:27,280 --> 00:16:29,120 Speaker 1: had some some talk, I mean, like like I know 337 00:16:29,400 --> 00:16:31,440 Speaker 1: there was a letter that went I think from the 338 00:16:31,520 --> 00:16:33,360 Speaker 1: s i A signed by a whole bunch of semi 339 00:16:33,360 --> 00:16:36,360 Speaker 1: conductor CEOs recently, and I know people have been to 340 00:16:36,600 --> 00:16:38,760 Speaker 1: the Biden administration and I know people have been pushing 341 00:16:38,800 --> 00:16:41,240 Speaker 1: them to try to do something to alleviate the capacity concerned. 342 00:16:41,480 --> 00:16:43,160 Speaker 1: There's not a whole lot they can do in the 343 00:16:43,200 --> 00:16:44,800 Speaker 1: in the near term. I mean, even if they decided 344 00:16:44,840 --> 00:16:48,120 Speaker 1: tomorrow to to fund a bunch of capacity expansion. You know, 345 00:16:48,240 --> 00:16:51,200 Speaker 1: it takes years to to build this stuff out right, 346 00:16:51,240 --> 00:16:55,200 Speaker 1: so nothing they're doing will will affect the issues right now. 347 00:16:55,200 --> 00:16:56,440 Speaker 1: The only thing you can do right now is you 348 00:16:56,440 --> 00:16:59,000 Speaker 1: can encourage the the guys that do their own manufacturing 349 00:16:59,000 --> 00:17:00,640 Speaker 1: to round capacity, which are doing and I'll get to 350 00:17:00,680 --> 00:17:02,120 Speaker 1: the other part of your question a minute on that 351 00:17:02,840 --> 00:17:05,520 Speaker 1: UM and encourage t SMC you know, and other foundaries 352 00:17:05,520 --> 00:17:08,760 Speaker 1: to to to try to accelerate UM the auto wafers 353 00:17:08,800 --> 00:17:10,400 Speaker 1: through the fabs, which again they seem to be doing 354 00:17:10,440 --> 00:17:12,920 Speaker 1: in some suspended will take time. A lot of the 355 00:17:13,000 --> 00:17:15,720 Speaker 1: guys that do their own manufacturing actually are increasing capacity. 356 00:17:15,760 --> 00:17:19,199 Speaker 1: And you know, uh NXP talked about this a little bit. 357 00:17:19,200 --> 00:17:20,960 Speaker 1: They're the rounding it just it just takes time to 358 00:17:21,000 --> 00:17:22,960 Speaker 1: do it. Like none of this, none of this stuff 359 00:17:23,000 --> 00:17:25,840 Speaker 1: is instant, right. You have to buy the tools, you 360 00:17:25,840 --> 00:17:28,480 Speaker 1: have to install them, you have to qualify them. With 361 00:17:28,560 --> 00:17:32,119 Speaker 1: automotive in particular, the qualification there's a there's what's called 362 00:17:32,119 --> 00:17:34,400 Speaker 1: a qualification process to make sure that the part itself 363 00:17:34,400 --> 00:17:38,800 Speaker 1: works um and you have to qualify the part typically 364 00:17:38,840 --> 00:17:41,800 Speaker 1: made on a specific process at a specific location. And 365 00:17:41,960 --> 00:17:45,680 Speaker 1: the reason is within automotive, the reliability levels need to 366 00:17:45,680 --> 00:17:47,919 Speaker 1: be really really high. Like you can't like have recall, 367 00:17:48,119 --> 00:17:51,000 Speaker 1: you know, thousands of fifty dollar automobiles because the two 368 00:17:51,000 --> 00:17:54,120 Speaker 1: dollar micro controller doesn't work right. So there's a whole 369 00:17:54,160 --> 00:17:56,239 Speaker 1: qualification process you have to go through too as you're 370 00:17:56,240 --> 00:17:59,240 Speaker 1: bringing capacity up. So it just takes time. As far 371 00:17:59,240 --> 00:18:01,679 Speaker 1: as TSMC goes like, I'll be honest, like autos not 372 00:18:01,720 --> 00:18:03,320 Speaker 1: a big piece of their business. I don't know how 373 00:18:03,359 --> 00:18:05,959 Speaker 1: we how eager they are to bring on more automotive 374 00:18:06,520 --> 00:18:09,120 Speaker 1: capacity in general, but it'll get to the other point 375 00:18:09,160 --> 00:18:11,480 Speaker 1: of like where the rest of these constructions, t SMC 376 00:18:11,560 --> 00:18:15,159 Speaker 1: actually is adding a ton of capacity this year just 377 00:18:15,240 --> 00:18:18,720 Speaker 1: because demand is off the charts. So that was something 378 00:18:18,760 --> 00:18:21,520 Speaker 1: that came out well after our last discussion, and I 379 00:18:21,560 --> 00:18:24,080 Speaker 1: think it was even after when we did our t 380 00:18:24,240 --> 00:18:26,560 Speaker 1: SMC specific episode, might have even been like a couple 381 00:18:26,560 --> 00:18:28,960 Speaker 1: of days later. What they announced it was like something 382 00:18:29,000 --> 00:18:31,919 Speaker 1: like they were gonna do twenty billion dollars in fresh 383 00:18:32,400 --> 00:18:36,919 Speaker 1: capital expended from seventeen last year. Yeah. I was just 384 00:18:36,920 --> 00:18:39,520 Speaker 1: gonna say, like, what is that? Put that into context 385 00:18:39,520 --> 00:18:43,560 Speaker 1: because that number came out t SMC tellent somebody they're 386 00:18:43,560 --> 00:18:46,720 Speaker 1: gonna do twenty eight billion in capital expenditures. How what 387 00:18:46,840 --> 00:18:51,160 Speaker 1: does that mean? How big is that? It's like the revenues, 388 00:18:51,840 --> 00:18:59,800 Speaker 1: it's big. Intel's average capital expenditure given your ballpark fifteen billion. Wow, 389 00:19:00,480 --> 00:19:02,840 Speaker 1: it's it's it's a it's big. And some of it 390 00:19:02,840 --> 00:19:04,840 Speaker 1: actually may even be Intel because like Intel will be 391 00:19:04,880 --> 00:19:08,119 Speaker 1: doing more outsourcing. Although my guess is, you know, and 392 00:19:08,359 --> 00:19:10,680 Speaker 1: when they saw that, people saw that guide actually people 393 00:19:10,720 --> 00:19:12,680 Speaker 1: really thought Intel was would be doing a ton of outsourcing. 394 00:19:12,680 --> 00:19:16,160 Speaker 1: Although when Gelsinger a talk on Intel's earnings called recently, 395 00:19:16,200 --> 00:19:19,000 Speaker 1: he basically said, we think we fixed seven, Like we'll 396 00:19:19,000 --> 00:19:20,879 Speaker 1: see we think we fixed that. In the majority of 397 00:19:20,880 --> 00:19:23,840 Speaker 1: our products like will be in house, although they will 398 00:19:23,880 --> 00:19:26,480 Speaker 1: be increasing their use of outsourcing. So but this is 399 00:19:26,480 --> 00:19:28,720 Speaker 1: that this is a guide, Like I think a lot 400 00:19:28,720 --> 00:19:32,320 Speaker 1: of the just in general, demand overall is off the charts, 401 00:19:32,359 --> 00:19:33,720 Speaker 1: so you can look at it. And this gets to 402 00:19:33,800 --> 00:19:35,639 Speaker 1: your other the question you asked like first, which is 403 00:19:35,680 --> 00:19:38,440 Speaker 1: what about the other supply constrains outside of bottle, right, 404 00:19:38,600 --> 00:19:42,520 Speaker 1: So they're actually being driven more by by demand versus 405 00:19:42,600 --> 00:19:45,760 Speaker 1: like massive whipsaws in the supply situation, like we didn't 406 00:19:45,800 --> 00:19:48,520 Speaker 1: really see all that much. And and by and large, 407 00:19:48,600 --> 00:19:50,520 Speaker 1: like I said, semis in general through COVID have been 408 00:19:50,560 --> 00:19:53,439 Speaker 1: pretty resilient. PCs have been off the charts, like anything 409 00:19:53,520 --> 00:19:57,880 Speaker 1: that was worked from home, study from home, play from home, PCs, 410 00:19:58,200 --> 00:20:03,320 Speaker 1: five G smartphones, game on solds GPUs AI, data center stuff, 411 00:20:03,960 --> 00:20:06,680 Speaker 1: um in industrial in general, especially in areas like China, 412 00:20:06,760 --> 00:20:09,760 Speaker 1: it has all been just really really strong. And like 413 00:20:09,920 --> 00:20:12,320 Speaker 1: PCs for example, and we had three hundred million PCs, 414 00:20:12,960 --> 00:20:14,680 Speaker 1: we haven't seen numbers like that in years and years. 415 00:20:14,800 --> 00:20:18,399 Speaker 1: Notebooks grew like thirty five year over year, total PCs 416 00:20:18,440 --> 00:20:21,240 Speaker 1: grew like sixteen or something. UM to give you some 417 00:20:21,320 --> 00:20:23,679 Speaker 1: contexts there, that the prior kind of normalized run rate 418 00:20:23,720 --> 00:20:25,400 Speaker 1: for the industry was like two D and fifty million 419 00:20:25,480 --> 00:20:27,679 Speaker 1: units and it had been falling for a decade. All 420 00:20:27,680 --> 00:20:29,639 Speaker 1: of a sudden we went to three hundred million. I mean, 421 00:20:29,720 --> 00:20:32,960 Speaker 1: like demand is off the charts. UM smartphones. Smartphones have 422 00:20:33,040 --> 00:20:35,359 Speaker 1: been kind of weak, but five G has been incredibly strong, 423 00:20:35,440 --> 00:20:38,720 Speaker 1: and five G has much higher semiconductor content. Game consoles, 424 00:20:38,760 --> 00:20:40,760 Speaker 1: go try to buy a PlayStation or a switch, like 425 00:20:40,840 --> 00:20:43,719 Speaker 1: you can't sold out the same thing with a GPU, right, 426 00:20:43,800 --> 00:20:46,320 Speaker 1: Like that that that demand for leading edge capas TSMC 427 00:20:46,440 --> 00:20:48,359 Speaker 1: is sold out, I mean they've been sold out. And 428 00:20:48,440 --> 00:20:51,199 Speaker 1: then on the more mature note stuff, industrial has been 429 00:20:51,280 --> 00:20:52,840 Speaker 1: very strong. And again we can talk about some of 430 00:20:53,040 --> 00:20:55,639 Speaker 1: the risks here sustainability and everything else, but like areas 431 00:20:55,720 --> 00:20:58,760 Speaker 1: like in China, they were covered very rapidly. I mean 432 00:20:58,840 --> 00:21:02,520 Speaker 1: China's GDP grew this year. Right. UM industrial has been 433 00:21:02,600 --> 00:21:04,400 Speaker 1: very strong, and it just sucks up all that capacity. 434 00:21:04,400 --> 00:21:07,560 Speaker 1: And TSMC has been tight forever and they're even tighter now. 435 00:21:07,600 --> 00:21:09,920 Speaker 1: And so they're they're they're adding right and and and 436 00:21:10,119 --> 00:21:12,520 Speaker 1: they see I think they talked about kind of multi 437 00:21:12,600 --> 00:21:14,719 Speaker 1: year growth. You know, I can't remember twenty percent a year. 438 00:21:14,760 --> 00:21:15,960 Speaker 1: I think for the next five years or something. I 439 00:21:15,960 --> 00:21:18,600 Speaker 1: think that's what they said. But that's what's causing most 440 00:21:18,640 --> 00:21:21,159 Speaker 1: of the other shortages. It's it's less of a you know, 441 00:21:21,280 --> 00:21:23,280 Speaker 1: the the supply went offline and then you have to 442 00:21:23,320 --> 00:21:25,080 Speaker 1: come back. It just demands been off the charts, and 443 00:21:25,160 --> 00:21:26,960 Speaker 1: just there's only so much supply that's out there in 444 00:21:27,000 --> 00:21:29,680 Speaker 1: the first place. So this feeds into something else I 445 00:21:29,760 --> 00:21:32,680 Speaker 1: wanted to ask, which is how normal is it in 446 00:21:32,760 --> 00:21:37,280 Speaker 1: the chip industry to have capacity constraints after a downturn, 447 00:21:37,560 --> 00:21:40,840 Speaker 1: Like does it always take some time for supply to 448 00:21:41,000 --> 00:21:45,040 Speaker 1: balance out with demand given it's hard to sort of estimate, 449 00:21:45,240 --> 00:21:47,960 Speaker 1: you know, when people are going to start buying computers 450 00:21:48,040 --> 00:21:51,520 Speaker 1: and things like that again, or and how how exceptional 451 00:21:51,840 --> 00:21:56,360 Speaker 1: is this current situation versus what we've seen before. Yeah, 452 00:21:56,600 --> 00:21:58,040 Speaker 1: I'll need to step you back, but first I got 453 00:21:58,119 --> 00:22:01,600 Speaker 1: to tell you for Semis was not a downturn. Sendy 454 00:22:01,720 --> 00:22:03,800 Speaker 1: Sendys grew six and a half percent year over year 455 00:22:03,800 --> 00:22:08,560 Speaker 1: in nineteen was a downturn, and twenty eight were very 456 00:22:08,640 --> 00:22:11,840 Speaker 1: twenty eighteen were very strong. Twenty was was a good year. 457 00:22:11,880 --> 00:22:14,600 Speaker 1: In one I mean, if you just roll up like 458 00:22:14,760 --> 00:22:16,680 Speaker 1: normal seasonality from where we are now, I mean, you 459 00:22:16,720 --> 00:22:18,600 Speaker 1: could be up double digits, Like, assuming we don't hit 460 00:22:18,640 --> 00:22:20,440 Speaker 1: a wall, we can get we can talk about that. 461 00:22:21,040 --> 00:22:23,440 Speaker 1: But twenty was not a downturn. That and that, like, 462 00:22:23,720 --> 00:22:25,040 Speaker 1: that's part of the thing. I think in your early 463 00:22:25,080 --> 00:22:27,240 Speaker 1: and people thought it would be a downturn, right, and 464 00:22:27,320 --> 00:22:29,280 Speaker 1: so you sort of planned accordingly, and then and then 465 00:22:29,320 --> 00:22:31,399 Speaker 1: it wasn't. You sort of asked, like, how does this 466 00:22:31,440 --> 00:22:34,840 Speaker 1: compare versus history? The cyclical nature of the industry has 467 00:22:34,840 --> 00:22:38,000 Speaker 1: actually changed quite a bit, And so you're right, it 468 00:22:38,200 --> 00:22:41,600 Speaker 1: used to be very cyclical, and you would get big 469 00:22:41,760 --> 00:22:45,479 Speaker 1: swings in industry utilization and big mismatches between supply and demand, 470 00:22:46,280 --> 00:22:48,320 Speaker 1: um and and and the reasons. I mean, you can 471 00:22:48,359 --> 00:22:50,159 Speaker 1: go back to like two thousand for example, this was 472 00:22:50,240 --> 00:22:51,840 Speaker 1: like this is the tech bubble, but it was sort 473 00:22:51,840 --> 00:22:54,960 Speaker 1: of an extreme example of a supply driven cycle. What 474 00:22:55,200 --> 00:22:59,440 Speaker 1: used to happen is demand would be strong, supply would 475 00:22:59,480 --> 00:23:03,600 Speaker 1: be tight, Companies would build out incremental capacity because you'd 476 00:23:03,600 --> 00:23:06,240 Speaker 1: be leaving money on the table, right. Pricing would go 477 00:23:06,359 --> 00:23:08,440 Speaker 1: up because like end custers would be fighting to to 478 00:23:08,640 --> 00:23:11,080 Speaker 1: to fill up that capacity and then to get the products. 479 00:23:11,680 --> 00:23:13,960 Speaker 1: It would take you know, eighteen to eighteen months or 480 00:23:14,000 --> 00:23:16,200 Speaker 1: whatever it was to sort of bring that capacity back online, 481 00:23:16,480 --> 00:23:18,320 Speaker 1: to bring the new capacle on. Usually by then the 482 00:23:18,320 --> 00:23:20,840 Speaker 1: business cycle would be turning all of a sudden. That 483 00:23:21,280 --> 00:23:23,320 Speaker 1: and I have the charts like that. The caps of 484 00:23:23,440 --> 00:23:25,680 Speaker 1: the historically would come on right when when demand was 485 00:23:25,720 --> 00:23:27,160 Speaker 1: falling off. All of a sudden. You go from full 486 00:23:27,200 --> 00:23:31,119 Speaker 1: fabs empty fabs. You would lower price now because like, 487 00:23:31,800 --> 00:23:33,520 Speaker 1: once you have the acids in the ground, it's always 488 00:23:33,560 --> 00:23:35,479 Speaker 1: better to fill it with something rather than nothing, as 489 00:23:35,520 --> 00:23:37,680 Speaker 1: long as you're covering your cash cost. And so you 490 00:23:37,720 --> 00:23:40,000 Speaker 1: get in the industry, units and pricing moving together, and 491 00:23:40,080 --> 00:23:43,000 Speaker 1: you get really big swings. And I mean it wasn't uncommon. 492 00:23:43,080 --> 00:23:45,640 Speaker 1: We used to to see like normal revenues sins year 493 00:23:45,760 --> 00:23:48,280 Speaker 1: year in semi conductors. It could be in either direction. 494 00:23:48,320 --> 00:23:50,680 Speaker 1: Like it was very very common. Um And like I 495 00:23:50,720 --> 00:23:52,680 Speaker 1: said two thousand, two thousand and one, the tech bubble 496 00:23:52,720 --> 00:23:54,280 Speaker 1: was sort of an extreme example of this kind of 497 00:23:54,320 --> 00:23:56,960 Speaker 1: supply driven cycle. We don't really get these kinds of 498 00:23:57,000 --> 00:23:59,280 Speaker 1: cycles anywhere. We get them in memory, but for the 499 00:23:59,359 --> 00:24:01,479 Speaker 1: rest of the industy, supply and demand has actually been 500 00:24:01,560 --> 00:24:04,440 Speaker 1: much better matched over the last like five to ten years. Yeah, 501 00:24:04,560 --> 00:24:07,639 Speaker 1: I remember like when I first started, Like I I 502 00:24:08,040 --> 00:24:10,680 Speaker 1: briefly had a job in like two thousand four, two 503 00:24:10,720 --> 00:24:14,879 Speaker 1: thousand five, and it involves some equity research, and like 504 00:24:15,440 --> 00:24:18,280 Speaker 1: the Book to Build race ratio. Isn't that like a thing? 505 00:24:18,400 --> 00:24:20,160 Speaker 1: Didn't that used to be a big thing in semis? 506 00:24:20,280 --> 00:24:22,600 Speaker 1: Maybe it still is, but yeah, it depends on the company. 507 00:24:22,640 --> 00:24:24,399 Speaker 1: It still can be. But like that was like a 508 00:24:24,480 --> 00:24:27,679 Speaker 1: big indicator in terms of like where we were at 509 00:24:27,720 --> 00:24:30,359 Speaker 1: any given time for the industry in that cycle that 510 00:24:30,400 --> 00:24:33,719 Speaker 1: you just described. Yeah, yeah, it's it's it's less important now. 511 00:24:33,800 --> 00:24:36,360 Speaker 1: I mean we've we've had just like I said, we've 512 00:24:36,400 --> 00:24:40,240 Speaker 1: had better you know kind of channel management. Um, we've 513 00:24:40,280 --> 00:24:42,399 Speaker 1: had some companies like Texas Incidents or for example, that 514 00:24:42,440 --> 00:24:44,400 Speaker 1: do a lot of stuff on consignment where the Book 515 00:24:44,440 --> 00:24:47,560 Speaker 1: to Build by definition is one anyways, So it's it's 516 00:24:47,680 --> 00:24:49,399 Speaker 1: it depends on the company. For some of these, like 517 00:24:49,520 --> 00:24:51,639 Speaker 1: large diversified guys that sell a lot to the channel, 518 00:24:51,640 --> 00:24:53,400 Speaker 1: Book to Build can still be important for the semi 519 00:24:53,440 --> 00:24:55,280 Speaker 1: caap guy's Book to Build in some sense can still 520 00:24:55,280 --> 00:24:58,760 Speaker 1: be important, but it's probably less meaningful metric than it was. 521 00:24:58,880 --> 00:25:00,560 Speaker 1: You know, like like in the early two thousands, which 522 00:25:00,560 --> 00:25:03,320 Speaker 1: is when you're talking about Yeah, like I said, these 523 00:25:03,400 --> 00:25:05,520 Speaker 1: kind of supply cycles, we do get them in memory, 524 00:25:05,960 --> 00:25:09,359 Speaker 1: and and memory is a supply demand driven business, and 525 00:25:09,640 --> 00:25:11,920 Speaker 1: we can we have probably another whole call just on 526 00:25:12,000 --> 00:25:14,960 Speaker 1: memory at some point if you wanted to. But in 527 00:25:15,160 --> 00:25:17,760 Speaker 1: general for the broader industry, we don't really see massive 528 00:25:17,800 --> 00:25:20,840 Speaker 1: supply cycles anywhere. What we mostly see our inventory cycles, 529 00:25:21,600 --> 00:25:24,000 Speaker 1: like we'll see, we haven't so we've seen constraints before, 530 00:25:24,040 --> 00:25:26,280 Speaker 1: but I we've never really had constraints that were in 531 00:25:26,440 --> 00:25:29,800 Speaker 1: some part driven by a by a potential global catastrophe. 532 00:25:30,600 --> 00:25:33,879 Speaker 1: That's we we've had, whether we've had natural disasters and 533 00:25:33,920 --> 00:25:35,520 Speaker 1: things that have caused problem. I want to and I 534 00:25:35,600 --> 00:25:39,879 Speaker 1: want to talk about that because I remember, like and 535 00:25:40,000 --> 00:25:42,359 Speaker 1: this is something that actually I want to bring up 536 00:25:42,359 --> 00:25:44,920 Speaker 1: because I remember, like I know, that was an earthquake 537 00:25:45,000 --> 00:25:49,440 Speaker 1: in Taiwan, and briefly not Taiwan semis production of With 538 00:25:49,640 --> 00:25:53,280 Speaker 1: the world so dependent on Taiwan and Taiwan is on 539 00:25:53,400 --> 00:25:56,680 Speaker 1: a fault line, what are the risks of a big 540 00:25:56,800 --> 00:26:01,720 Speaker 1: earthquake that seriously disrupts the semi inductor supply chain, which 541 00:26:01,760 --> 00:26:03,760 Speaker 1: now as we understand, is the supply chain of everything 542 00:26:04,119 --> 00:26:06,600 Speaker 1: for a sustained period of time, and how how much 543 00:26:06,640 --> 00:26:10,400 Speaker 1: of that is an issue? Yeah, look so I mean TSMC, 544 00:26:10,520 --> 00:26:13,160 Speaker 1: I mean they build pretty well in Taiwan, and they're 545 00:26:13,240 --> 00:26:15,159 Speaker 1: prepared for earthquakes, but if we had like an eight 546 00:26:15,200 --> 00:26:16,880 Speaker 1: and a half or something in Taiwan, Yeah, it would 547 00:26:16,880 --> 00:26:20,320 Speaker 1: be really problematic. Um. Sure, This is one reason that 548 00:26:20,400 --> 00:26:22,960 Speaker 1: they've in general, people have pushed for diversification, like like 549 00:26:23,080 --> 00:26:25,639 Speaker 1: you take Global Founders for example, I mean that the 550 00:26:25,720 --> 00:26:27,880 Speaker 1: global in their name is not an accident. Like part 551 00:26:27,920 --> 00:26:30,359 Speaker 1: of their value proposition was we have fabs everywhere right 552 00:26:30,400 --> 00:26:32,200 Speaker 1: there in Singapore and they're in Europe and they're in 553 00:26:32,200 --> 00:26:35,240 Speaker 1: the US. Right Obviously, they don't do leading edge anymore. 554 00:26:35,240 --> 00:26:36,840 Speaker 1: It's it's it's, it's other stuff. But that was part 555 00:26:36,880 --> 00:26:40,280 Speaker 1: of the theory their value proposition was was geographical diversification. 556 00:26:40,840 --> 00:26:42,960 Speaker 1: I mean, you can get disasters anywhere, obviously. I mean 557 00:26:43,160 --> 00:26:45,000 Speaker 1: we even just recently we had the earthquake in Japan. 558 00:26:45,200 --> 00:26:47,240 Speaker 1: You know, we we've we've got the storms in Texas 559 00:26:47,320 --> 00:26:49,800 Speaker 1: right now. We've got fabs semiconductor fabs a number of 560 00:26:49,800 --> 00:26:52,320 Speaker 1: them in Austin that are that were shut down because 561 00:26:52,359 --> 00:26:54,119 Speaker 1: of that. But yeah, I would say, like we had 562 00:26:54,200 --> 00:26:57,040 Speaker 1: some like massive like natural disaster in Taiwan, it would 563 00:26:57,080 --> 00:27:01,760 Speaker 1: be problematic. Yeah, so I have a million dollar question 564 00:27:01,880 --> 00:27:05,399 Speaker 1: for you. But um, you know, is is the shortage 565 00:27:05,920 --> 00:27:10,760 Speaker 1: going to be intense enough or bad enough to help Intel? 566 00:27:11,720 --> 00:27:14,560 Speaker 1: Intel is a little different, right, So they're they've got 567 00:27:14,600 --> 00:27:16,320 Speaker 1: some shortage of less a year or so, but but 568 00:27:16,520 --> 00:27:19,919 Speaker 1: not so much because I mean they brought an initial supply. 569 00:27:19,960 --> 00:27:22,800 Speaker 1: It's just PC demand has been off the charts, right, 570 00:27:23,000 --> 00:27:25,040 Speaker 1: So it's not like if you're asking, like, because of 571 00:27:25,080 --> 00:27:27,680 Speaker 1: the shortages, are they going to pick up incremental customers? No, 572 00:27:28,640 --> 00:27:30,960 Speaker 1: they do not have a custom foundry business, right, And 573 00:27:31,520 --> 00:27:33,159 Speaker 1: this gets part of the part of the argument of 574 00:27:33,240 --> 00:27:36,320 Speaker 1: like building new factories in the US, and I've we've 575 00:27:36,359 --> 00:27:37,879 Speaker 1: written about that. We may have even talked about this 576 00:27:38,000 --> 00:27:39,520 Speaker 1: the last time. I think I told you last time, 577 00:27:39,560 --> 00:27:41,760 Speaker 1: like the twenty or twenty five billion dollars over like 578 00:27:41,880 --> 00:27:43,159 Speaker 1: five years, which is I think what some of the 579 00:27:43,240 --> 00:27:45,200 Speaker 1: numbers we're hearing about in the US, right, it's it's 580 00:27:45,320 --> 00:27:46,800 Speaker 1: rounding her. I think I used the phrase we need 581 00:27:46,840 --> 00:27:49,440 Speaker 1: an apollo moment, right, but you could imagine like what 582 00:27:49,480 --> 00:27:51,840 Speaker 1: could happen. Let's let's imagine a scenario where like Intel 583 00:27:51,920 --> 00:27:54,080 Speaker 1: was anointed a national champion and we're gonna help them 584 00:27:54,080 --> 00:27:56,399 Speaker 1: build like tons of new fabs in the US. They 585 00:27:56,440 --> 00:27:58,720 Speaker 1: don't have a third party business, so either they'd have 586 00:27:58,800 --> 00:28:01,000 Speaker 1: to find some way to attractive into third party customers, 587 00:28:01,040 --> 00:28:02,520 Speaker 1: which we can talk about why they had problems with 588 00:28:02,560 --> 00:28:05,200 Speaker 1: that in past, or like that number money maybe better 589 00:28:05,240 --> 00:28:06,960 Speaker 1: off going through like a non US company like a 590 00:28:07,000 --> 00:28:09,920 Speaker 1: t SMC or Samson that has customers. So no, I 591 00:28:09,960 --> 00:28:12,639 Speaker 1: don't think that like because of shortages at t SMC 592 00:28:12,800 --> 00:28:14,320 Speaker 1: or something that like Intel is going to pick up 593 00:28:14,359 --> 00:28:16,840 Speaker 1: a bunch of incremental revenue from that. We're Intel is 594 00:28:16,880 --> 00:28:18,879 Speaker 1: benefiting right now, is that PC demand is off the 595 00:28:18,960 --> 00:28:22,200 Speaker 1: charts right and they Intel, to their credit, had a 596 00:28:22,400 --> 00:28:24,920 Speaker 1: very good year last year. I wonder whether, and it's 597 00:28:24,920 --> 00:28:26,639 Speaker 1: sound horrible to say it, but I wonder like what 598 00:28:26,720 --> 00:28:28,280 Speaker 1: they would have looked like if it wasn't for COVID. 599 00:28:28,400 --> 00:28:30,040 Speaker 1: My guess is PCs would not have been nearly as 600 00:28:30,040 --> 00:28:32,720 Speaker 1: strong as they were. And and we'll see what happens, 601 00:28:33,520 --> 00:28:35,639 Speaker 1: you know, going forward. I mean just my personally, like 602 00:28:35,720 --> 00:28:37,880 Speaker 1: I live in Los Angeles and I've got four kids, 603 00:28:38,000 --> 00:28:39,840 Speaker 1: and like they've all been home from school since April. 604 00:28:39,840 --> 00:28:43,040 Speaker 1: I bought four notebooks last year. Wow, I'm probably not 605 00:28:43,160 --> 00:28:46,360 Speaker 1: buying any notebook computers for a while. Lifting like buying 606 00:28:46,520 --> 00:28:50,360 Speaker 1: a notebook As a semiconductor analyst, you know, it's like 607 00:28:50,440 --> 00:28:52,280 Speaker 1: I go on every I buy a new computer every 608 00:28:52,360 --> 00:28:54,320 Speaker 1: few years, I like click a few buttons. I don't 609 00:28:54,320 --> 00:28:56,880 Speaker 1: really care because all I do is tweet and record 610 00:28:56,960 --> 00:29:01,000 Speaker 1: this podcast with Tracy. But like you know, once the 611 00:29:01,240 --> 00:29:04,440 Speaker 1: computer buying process, like for someone who knows as much 612 00:29:04,480 --> 00:29:06,720 Speaker 1: as you, I learned a lesson, which is to try 613 00:29:06,760 --> 00:29:10,720 Speaker 1: to buy better. And I gotta give Intel credit for him. 614 00:29:10,720 --> 00:29:13,120 Speaker 1: And I bought cheap PCs in the past. They don't 615 00:29:13,120 --> 00:29:15,080 Speaker 1: they never last. I bought good ones on the hope 616 00:29:15,120 --> 00:29:18,040 Speaker 1: that they can use them for a while. Um, but 617 00:29:18,200 --> 00:29:20,240 Speaker 1: that's that's kind of and that's that's what I bought. 618 00:29:21,600 --> 00:29:25,960 Speaker 1: So if you had to choose like one lasting impact 619 00:29:26,360 --> 00:29:29,840 Speaker 1: of the chip shortage, like one big thing it's going 620 00:29:29,920 --> 00:29:32,320 Speaker 1: to change in the industry, what would it be, Like, 621 00:29:32,480 --> 00:29:34,960 Speaker 1: what is the most likely likely outcome? Well, I think 622 00:29:34,960 --> 00:29:36,320 Speaker 1: there's a few things. I mean, I mean, look, we 623 00:29:36,360 --> 00:29:38,360 Speaker 1: we've already talked about like all what's auto gonna do 624 00:29:38,480 --> 00:29:40,600 Speaker 1: with with inventories that I think they're gonna have told 625 00:29:40,640 --> 00:29:43,840 Speaker 1: higher inventories. I think that's fine. The other is, like, 626 00:29:43,960 --> 00:29:45,800 Speaker 1: you know, again I wonder about t SMC, so like 627 00:29:45,840 --> 00:29:48,959 Speaker 1: they've got this like massive capex guide. Is it ever 628 00:29:49,040 --> 00:29:53,040 Speaker 1: gonna go structurally lower? I don't know, right, um. I 629 00:29:53,080 --> 00:29:55,000 Speaker 1: mean again, they were doing you whatever it was, you know, 630 00:29:55,640 --> 00:29:58,760 Speaker 1: fifteen billion, seventeen billion, Like, is that capex number ever 631 00:29:58,800 --> 00:30:02,520 Speaker 1: gonna not have a two in for of it? Maybe not, 632 00:30:02,800 --> 00:30:04,320 Speaker 1: Like maybe it'll stay up here. So I think that's 633 00:30:04,400 --> 00:30:07,600 Speaker 1: that's quite possible that that capex level. I mean, there 634 00:30:07,640 --> 00:30:10,520 Speaker 1: are there are reasons to think that that that semiconductor 635 00:30:11,280 --> 00:30:14,560 Speaker 1: capex should be structurally higher going forward anyways. But I 636 00:30:14,640 --> 00:30:16,200 Speaker 1: mean like that that is when we're actually seeing a 637 00:30:16,240 --> 00:30:19,640 Speaker 1: lot more demand. And by the way, especially if you 638 00:30:19,800 --> 00:30:23,600 Speaker 1: think that, like coming out of COVID, that semiconductors are 639 00:30:23,640 --> 00:30:25,320 Speaker 1: going to be more important than they weren't. And I've 640 00:30:25,360 --> 00:30:27,680 Speaker 1: kind of been coming around to this, you know, I 641 00:30:27,840 --> 00:30:29,920 Speaker 1: was of the belief for a while, for a long time, frankly, 642 00:30:29,960 --> 00:30:33,120 Speaker 1: that semi's were mature. I even did a big piece. 643 00:30:33,280 --> 00:30:35,960 Speaker 1: It was what Burnston calls a black book of years 644 00:30:36,000 --> 00:30:38,880 Speaker 1: back called Playbook for maturing industry, and the idea is 645 00:30:38,920 --> 00:30:40,760 Speaker 1: that maybe the industry has gone ex growth and like 646 00:30:41,040 --> 00:30:43,520 Speaker 1: in that environment, like you want to invest in certain ways. 647 00:30:43,600 --> 00:30:46,720 Speaker 1: And I'm no longer convinced that that's necessarily true. We've 648 00:30:46,720 --> 00:30:48,280 Speaker 1: had a number of good growth here since then and 649 00:30:48,440 --> 00:30:51,400 Speaker 1: coming out of COVID. I'll put the near term cyclical 650 00:30:51,480 --> 00:30:54,719 Speaker 1: concerns aside for a minute, but if I'm looking long term, 651 00:30:54,720 --> 00:30:57,120 Speaker 1: I gotta say I'm more positive on Semi's longer term 652 00:30:57,160 --> 00:30:58,600 Speaker 1: than I think I have been in a long time. 653 00:30:59,160 --> 00:31:02,120 Speaker 1: I think we are seeing real not not the only, 654 00:31:02,280 --> 00:31:05,120 Speaker 1: but real growth growth applications that are that are there 655 00:31:05,120 --> 00:31:07,320 Speaker 1: are people driving real businesses off of whether it's a 656 00:31:07,480 --> 00:31:10,160 Speaker 1: I you know or whether it's you know you know 657 00:31:10,320 --> 00:31:12,560 Speaker 1: um otto. I've been an auto Semi both for a 658 00:31:12,640 --> 00:31:15,080 Speaker 1: long time. That that continent story is really coming through 659 00:31:15,120 --> 00:31:17,640 Speaker 1: an autonomous driving and even five G and IoT and 660 00:31:17,680 --> 00:31:20,160 Speaker 1: all this stuff. I also think COVID has really pulled 661 00:31:20,200 --> 00:31:23,880 Speaker 1: digitization forward by by years, and then we're seeing like 662 00:31:23,960 --> 00:31:26,920 Speaker 1: both from a functional as well as a strategic standpoint, 663 00:31:27,040 --> 00:31:29,760 Speaker 1: just given all of like the sovereign interest, how important 664 00:31:29,840 --> 00:31:32,160 Speaker 1: is this industry actually is you you know, to to 665 00:31:32,240 --> 00:31:36,240 Speaker 1: the global economy. Yeah, I'm I'm more important. I'm I'm 666 00:31:36,320 --> 00:31:38,600 Speaker 1: more positive long term on on on semis, I think 667 00:31:38,640 --> 00:31:40,120 Speaker 1: well than than than maybe I have been in a 668 00:31:40,200 --> 00:31:42,200 Speaker 1: long time. And so maybe that's the third change that 669 00:31:42,280 --> 00:31:43,920 Speaker 1: could be coming out of out of all this and 670 00:31:43,960 --> 00:31:46,880 Speaker 1: maybe not having to necessarily just with the shortages. But 671 00:31:47,000 --> 00:31:48,760 Speaker 1: I mean we're just seeing in general, like how important 672 00:31:48,800 --> 00:31:50,200 Speaker 1: this stuff really is and when we have a lack 673 00:31:50,280 --> 00:32:08,400 Speaker 1: of them, like how much it hurts? Could you? Actually 674 00:32:08,760 --> 00:32:11,600 Speaker 1: I feel like we brush over a little bit the 675 00:32:11,840 --> 00:32:15,520 Speaker 1: impact of the shortage on the sort of the non 676 00:32:15,760 --> 00:32:18,680 Speaker 1: auto areas. I mean, like, so like I assume there 677 00:32:18,720 --> 00:32:22,840 Speaker 1: are semiconductors and refrigerators. We know there's big shortages of those, 678 00:32:22,880 --> 00:32:25,120 Speaker 1: and I think there's various reasons. I know, demand is 679 00:32:25,160 --> 00:32:28,160 Speaker 1: off the chart. Tracy and I recently did an episode 680 00:32:28,160 --> 00:32:31,280 Speaker 1: about shipping, and so I think just getting like a 681 00:32:31,440 --> 00:32:35,680 Speaker 1: you know, washing machine or a a refrigerator shipped is 682 00:32:35,760 --> 00:32:39,360 Speaker 1: probably a pretty big bottleneck right now for that industry. 683 00:32:39,760 --> 00:32:43,720 Speaker 1: But how much is uh the sourcing of chips even 684 00:32:43,840 --> 00:32:46,480 Speaker 1: an issue for like things that we don't really think 685 00:32:46,520 --> 00:32:50,680 Speaker 1: of as tech per se. There's chips and everything, and frankly, 686 00:32:50,760 --> 00:32:52,520 Speaker 1: like even things that didn't used to have chips, are 687 00:32:52,520 --> 00:32:54,800 Speaker 1: getting chips in now even even your refrigerator, which, by 688 00:32:54,800 --> 00:32:56,760 Speaker 1: the way, you could argue maybe it's not the right 689 00:32:56,800 --> 00:32:58,120 Speaker 1: way to go. I don't I don't really need like 690 00:32:58,320 --> 00:33:02,640 Speaker 1: like internet on my fridge, but you buy one, right, Um, 691 00:33:03,160 --> 00:33:05,520 Speaker 1: but no, but I mean semis in general. I mean like, 692 00:33:05,760 --> 00:33:07,800 Speaker 1: but is that part of like when when all when 693 00:33:07,840 --> 00:33:11,160 Speaker 1: all these when all these customers are complaining about shortages 694 00:33:11,360 --> 00:33:14,680 Speaker 1: and I can't give this et cetera. Like I don't 695 00:33:14,720 --> 00:33:16,000 Speaker 1: know if it's as big of a deal as it 696 00:33:16,160 --> 00:33:17,960 Speaker 1: is for cars, But is that part of the story 697 00:33:18,080 --> 00:33:20,680 Speaker 1: here that people need to understand. Look, it's it's not 698 00:33:20,800 --> 00:33:22,680 Speaker 1: as like I said before, it's not as as as 699 00:33:22,800 --> 00:33:24,480 Speaker 1: much of an issue as it is with cars because 700 00:33:24,480 --> 00:33:27,440 Speaker 1: I don't think you have the supplies chain disruption that 701 00:33:27,560 --> 00:33:29,240 Speaker 1: we had with cars, and I think automotive had some 702 00:33:29,240 --> 00:33:32,160 Speaker 1: of these unique characteristics that made it particularly vulnerable to this. 703 00:33:32,680 --> 00:33:35,280 Speaker 1: But we are seeing shortage and just just again, just 704 00:33:35,360 --> 00:33:37,680 Speaker 1: because demand is off the charts and capacity is what 705 00:33:37,760 --> 00:33:39,880 Speaker 1: it is. It will take t SMC time and other 706 00:33:39,920 --> 00:33:43,920 Speaker 1: foundries time to bring more capacity online. Um. But but yeah, 707 00:33:44,200 --> 00:33:47,160 Speaker 1: I mean anything that requires like semi conductors in general, 708 00:33:47,440 --> 00:33:50,520 Speaker 1: UM is going to be tight because you've got lots 709 00:33:50,600 --> 00:33:52,280 Speaker 1: of and some of these end markets that are fighting 710 00:33:52,280 --> 00:33:55,280 Speaker 1: for capacity are very big, right, and they're gonna suck 711 00:33:55,360 --> 00:33:57,200 Speaker 1: suck up more again, you had we just went through 712 00:33:57,200 --> 00:34:00,400 Speaker 1: an Apple cycle, Like Apple takes up a ton of capacity. Um, 713 00:34:00,600 --> 00:34:02,880 Speaker 1: You've got the data centered growth and and and and 714 00:34:02,960 --> 00:34:04,680 Speaker 1: everything else, everything else that's going to take up way 715 00:34:04,720 --> 00:34:06,960 Speaker 1: for volume. There's only just so much to go around. 716 00:34:07,000 --> 00:34:10,080 Speaker 1: So yeah, I mean, and look, over time, it will normalize. 717 00:34:10,160 --> 00:34:13,200 Speaker 1: Right by definition, like over a long period of time, 718 00:34:13,280 --> 00:34:16,279 Speaker 1: supply has to exactly equal demand, right, I mean, if 719 00:34:16,320 --> 00:34:18,840 Speaker 1: we if we take it out to infinity like eventually 720 00:34:18,960 --> 00:34:20,799 Speaker 1: like that that's how it will play out. So it will, 721 00:34:20,920 --> 00:34:23,440 Speaker 1: it will normalize. But there's other things you gotta worry 722 00:34:23,480 --> 00:34:25,800 Speaker 1: about it because like since some end markets, if I 723 00:34:25,840 --> 00:34:28,359 Speaker 1: don't ship the parts now, I can ship them later 724 00:34:29,040 --> 00:34:30,799 Speaker 1: in some but in other end markets, if I don't 725 00:34:30,800 --> 00:34:34,480 Speaker 1: ship it now, that demand just vanishes. Right. PCs is 726 00:34:34,520 --> 00:34:36,400 Speaker 1: a good idea, but we're seeing strong PECS right now. 727 00:34:36,440 --> 00:34:39,240 Speaker 1: But in a normal year, you know, there are product cycles, 728 00:34:39,280 --> 00:34:41,440 Speaker 1: like if you miss like back to school, like you 729 00:34:41,480 --> 00:34:43,239 Speaker 1: don't ship it, right, I mean, it just doesn't. It 730 00:34:43,280 --> 00:34:45,920 Speaker 1: doesn't happen. People don't buy two pieces later to make 731 00:34:46,000 --> 00:34:48,800 Speaker 1: up for the PC that they didn't buy, right. I 732 00:34:49,320 --> 00:34:50,839 Speaker 1: think this is you know, these are things that people 733 00:34:50,840 --> 00:34:53,520 Speaker 1: are gonna have to worry about. So here's a really 734 00:34:53,600 --> 00:34:57,920 Speaker 1: basic question. But do prices of chips just go up 735 00:34:58,200 --> 00:35:01,919 Speaker 1: or become prohibitively be expensive at some point at least 736 00:35:02,000 --> 00:35:05,719 Speaker 1: four I guess um non essential uses like maybe we 737 00:35:05,840 --> 00:35:10,359 Speaker 1: get fewer fridges with chips and internet capacity and things 738 00:35:10,480 --> 00:35:13,759 Speaker 1: like that. You know, it really depends on on the chip. 739 00:35:13,960 --> 00:35:16,120 Speaker 1: Like in some some markets, like we're seeing the so 740 00:35:16,239 --> 00:35:18,560 Speaker 1: for EGAM with some of the auto guys, they're taking 741 00:35:18,640 --> 00:35:22,120 Speaker 1: up price it by they're not exactly better it because 742 00:35:22,280 --> 00:35:25,239 Speaker 1: this isn't the only shortage we're seeing. Like the semiconductor 743 00:35:25,280 --> 00:35:27,799 Speaker 1: manufactors themselves are seeing costs go up because like raw 744 00:35:27,880 --> 00:35:30,560 Speaker 1: wafers are, we're getting a shortage, so the costs are 745 00:35:30,600 --> 00:35:31,880 Speaker 1: going up. And then for some of these guys that 746 00:35:31,920 --> 00:35:33,799 Speaker 1: are using foundries, some of the foundries are taking their 747 00:35:33,880 --> 00:35:36,480 Speaker 1: quotes up right, and so we're seeing them so they 748 00:35:36,520 --> 00:35:39,440 Speaker 1: are like taking up price where they need to sometimes, 749 00:35:40,120 --> 00:35:42,560 Speaker 1: but in other are another and another market you may 750 00:35:42,560 --> 00:35:44,759 Speaker 1: have like long term agreements already that that stopped you 751 00:35:44,800 --> 00:35:47,680 Speaker 1: from doing this over time though, I mean pricing adjust 752 00:35:47,760 --> 00:35:49,760 Speaker 1: right if there's a continued strong demand and no supply 753 00:35:49,840 --> 00:35:52,759 Speaker 1: like wels, we'll see what happens, but pricing tends not 754 00:35:53,200 --> 00:35:55,320 Speaker 1: it depends on the end market. But like you're not 755 00:35:55,360 --> 00:35:58,200 Speaker 1: gonna see it like right away, right. I have one 756 00:35:58,239 --> 00:36:01,479 Speaker 1: more question. It's very important to you. You mentioned maybe 757 00:36:01,560 --> 00:36:04,880 Speaker 1: we'll uh we we should do a memory episode. So 758 00:36:05,000 --> 00:36:08,279 Speaker 1: at some point in maybe in a couple of months, again, 759 00:36:08,320 --> 00:36:10,960 Speaker 1: we'll have you back, we'll talk memory. What is the 760 00:36:11,239 --> 00:36:15,160 Speaker 1: next episode besides that people tell us that we should 761 00:36:15,160 --> 00:36:18,640 Speaker 1: do an a s M l UM episode. Is that 762 00:36:18,719 --> 00:36:21,480 Speaker 1: where we we should go next with our semi conductor journey? 763 00:36:22,360 --> 00:36:24,320 Speaker 1: Well maybe, I mean, like if you're arguing, like what 764 00:36:24,400 --> 00:36:26,880 Speaker 1: are the most important strategic, the most important companies in 765 00:36:26,880 --> 00:36:28,840 Speaker 1: the world. One I think is certainly t SMC. The 766 00:36:28,880 --> 00:36:32,520 Speaker 1: other you could argue with SML because especially leading edge 767 00:36:32,560 --> 00:36:36,920 Speaker 1: manufacturing like it requires advance what's called lithography. This is 768 00:36:36,960 --> 00:36:40,600 Speaker 1: the process that's used to imprint on the circuitry patterns 769 00:36:40,640 --> 00:36:43,000 Speaker 1: on the chip. SML was the only game in town. 770 00:36:43,040 --> 00:36:44,640 Speaker 1: They're the only ones that make the tools that can 771 00:36:44,680 --> 00:36:47,040 Speaker 1: actually make features that small for for leading edge logic 772 00:36:47,560 --> 00:36:49,360 Speaker 1: and so yeah, and would and and but it is 773 00:36:49,400 --> 00:36:52,279 Speaker 1: a it is a phenomenally interesting company and they do 774 00:36:53,480 --> 00:36:55,320 Speaker 1: like if there's any like I always I think I 775 00:36:55,400 --> 00:36:58,280 Speaker 1: said before, you know, I think semiconductor manufacturing in general 776 00:36:58,360 --> 00:37:01,880 Speaker 1: can be it's got to is of black magic to it. Um, 777 00:37:02,000 --> 00:37:03,920 Speaker 1: and those guys are there are the ones that are 778 00:37:04,000 --> 00:37:06,839 Speaker 1: that are you know those are the wizards, right, Um, 779 00:37:07,920 --> 00:37:10,480 Speaker 1: they're the ones that enable it, like without a sm 780 00:37:10,560 --> 00:37:13,440 Speaker 1: L there's no t SMC. Like it's like a big 781 00:37:13,520 --> 00:37:16,520 Speaker 1: part of their capex is basically of check that they 782 00:37:16,560 --> 00:37:18,480 Speaker 1: write to s mL. Yeah. I mean you've got to 783 00:37:18,520 --> 00:37:20,120 Speaker 1: think about these tools. Have you ever seen like a 784 00:37:20,560 --> 00:37:24,200 Speaker 1: leading edge lithography tool? I mean they're there, so it's 785 00:37:24,239 --> 00:37:25,879 Speaker 1: this big thing. It's like the size of a room. 786 00:37:26,080 --> 00:37:28,360 Speaker 1: Like the e V tools can cost like two million 787 00:37:28,440 --> 00:37:30,560 Speaker 1: dollars a piece. It's like this the price of like 788 00:37:30,719 --> 00:37:34,160 Speaker 1: like like like a jumbo jet. Right. I mean they're 789 00:37:34,920 --> 00:37:38,319 Speaker 1: incredibly complicated. Again, we we could talk about like how 790 00:37:38,400 --> 00:37:41,160 Speaker 1: they work and and and but I like, again I 791 00:37:41,400 --> 00:37:43,000 Speaker 1: go back to that I'm amazed it works at all, 792 00:37:43,040 --> 00:37:46,200 Speaker 1: Like it shouldn't work. It's it's it's It's unbelievable the 793 00:37:46,520 --> 00:37:49,399 Speaker 1: level of of of engineering and science that goes into 794 00:37:49,440 --> 00:37:51,880 Speaker 1: these things, um, just to get the tool to be 795 00:37:51,920 --> 00:37:53,359 Speaker 1: able to do what it needs to do, to make 796 00:37:53,400 --> 00:37:55,840 Speaker 1: the chicks um to do what they need to do. 797 00:37:56,080 --> 00:37:58,960 Speaker 1: So yeah, I have one more question actually, which is 798 00:37:59,320 --> 00:38:04,000 Speaker 1: I've seen a number of commentators now talking about chips 799 00:38:04,120 --> 00:38:06,879 Speaker 1: as the new oil, and you can kind of see 800 00:38:06,880 --> 00:38:10,759 Speaker 1: the analogy there. I wonder, like, how how far does 801 00:38:10,840 --> 00:38:13,320 Speaker 1: that analogy go? Is it the right way to be 802 00:38:13,440 --> 00:38:15,919 Speaker 1: thinking about chips or do you have your own sort 803 00:38:15,960 --> 00:38:20,120 Speaker 1: of conceptual commodities framework for how you're thinking about semi 804 00:38:20,160 --> 00:38:22,719 Speaker 1: conductors right now? Yeah? I mean, look, so semmy's is 805 00:38:22,760 --> 00:38:24,520 Speaker 1: the new oil. And I mean look, if you figure 806 00:38:24,600 --> 00:38:26,520 Speaker 1: like a lot of the the you know, the industry 807 00:38:26,600 --> 00:38:29,680 Speaker 1: ran on oil and shortages cause problems. I mean, semis 808 00:38:29,680 --> 00:38:32,080 Speaker 1: are important, right, I mean, they're critical components of everything 809 00:38:32,120 --> 00:38:34,320 Speaker 1: that's around us. And I guess in that sense you 810 00:38:34,360 --> 00:38:37,120 Speaker 1: could argue that that that they are the new oil. Um. 811 00:38:37,320 --> 00:38:38,920 Speaker 1: I guess one of the differences. I mean, like, I 812 00:38:39,040 --> 00:38:40,760 Speaker 1: don't know how how far you want to draw the analogy. 813 00:38:40,840 --> 00:38:43,759 Speaker 1: OI oil is a pure commodity, right, and so like 814 00:38:43,880 --> 00:38:46,440 Speaker 1: the price of the oil is like is set completely 815 00:38:46,480 --> 00:38:49,200 Speaker 1: by by the supply demand situation and and and fright, 816 00:38:49,560 --> 00:38:52,400 Speaker 1: the cost structures of the various producers, you know, semis 817 00:38:52,440 --> 00:38:55,200 Speaker 1: are probably a little more differentiated, I guess from that standpoint, 818 00:38:55,239 --> 00:38:57,640 Speaker 1: so the dynamics aren't entirely similar. But I mean the 819 00:38:57,719 --> 00:39:00,200 Speaker 1: idea that it's like a single do you want to 820 00:39:00,239 --> 00:39:02,560 Speaker 1: call semi conductor is a single homogeneous like sort of 821 00:39:02,640 --> 00:39:03,960 Speaker 1: which they're not. But if you wanted to sort of 822 00:39:03,960 --> 00:39:06,360 Speaker 1: look at it at the industry that way, Um, it 823 00:39:06,520 --> 00:39:10,279 Speaker 1: is a very large, sort of very strategically important thing 824 00:39:10,360 --> 00:39:12,920 Speaker 1: that right now is getting concentrated in some areas of 825 00:39:12,960 --> 00:39:15,040 Speaker 1: the world we're get that are getting increasingly risky. I 826 00:39:15,080 --> 00:39:18,000 Speaker 1: think that analogy kind of holds. This is great. I 827 00:39:18,080 --> 00:39:22,280 Speaker 1: love you know, I love talking chips with you. Uh, Tracy, 828 00:39:22,360 --> 00:39:24,960 Speaker 1: anything more from you? I think, Stacy, you've made it 829 00:39:25,040 --> 00:39:28,520 Speaker 1: so clear that we've run out of questions. So thank you. 830 00:39:29,400 --> 00:39:32,320 Speaker 1: That was great, Stacy, Uh as awesome. I really appreciate 831 00:39:32,400 --> 00:39:35,240 Speaker 1: you joining us. I probably will thank you some questions 832 00:39:35,440 --> 00:39:38,040 Speaker 1: you don't. I've always wanted to do. I've always wanted 833 00:39:38,080 --> 00:39:41,080 Speaker 1: to do a two part podcast where we interview someone 834 00:39:41,640 --> 00:39:43,480 Speaker 1: and then publish it and then let a bunch of 835 00:39:43,520 --> 00:39:46,239 Speaker 1: people ask like send us follow up questions and to 836 00:39:46,280 --> 00:39:47,600 Speaker 1: do another one. Maybe we'll do that one day. I 837 00:39:47,640 --> 00:39:49,960 Speaker 1: do because I've been do it. Look at any time 838 00:39:50,000 --> 00:39:52,359 Speaker 1: you want me to come on, I'm happy to come on. Yes, 839 00:39:52,400 --> 00:39:53,960 Speaker 1: if you want to, like, put like a request on 840 00:39:54,840 --> 00:39:56,520 Speaker 1: and we can we can just do a free form 841 00:39:56,600 --> 00:39:59,440 Speaker 1: Q and I will do that in a few months. Stacy, 842 00:39:59,560 --> 00:40:03,920 Speaker 1: thank you how much for coming on back on My pleasure, 843 00:40:04,040 --> 00:40:24,680 Speaker 1: my pleasure. Thanks guys, Thanks Stacy. That was great. I 844 00:40:24,760 --> 00:40:27,360 Speaker 1: love this topic. We're going to do more. Sorry, I 845 00:40:27,400 --> 00:40:29,160 Speaker 1: don't know. I do you want to do more? I 846 00:40:29,280 --> 00:40:31,120 Speaker 1: really want to do more. I feel like we have 847 00:40:31,280 --> 00:40:34,319 Speaker 1: to do at least two more. I can tell you're 848 00:40:34,560 --> 00:40:36,719 Speaker 1: you're gunning for that a s m L episode, So 849 00:40:36,960 --> 00:40:38,920 Speaker 1: that's fine, I do. I do think it's going to 850 00:40:39,040 --> 00:40:42,279 Speaker 1: come up again and again, um as it has just 851 00:40:42,440 --> 00:40:45,600 Speaker 1: in the past six months. So yeah, I'm in for 852 00:40:45,800 --> 00:40:47,719 Speaker 1: more CHIPS episodes. I do think we should do a 853 00:40:47,760 --> 00:40:50,359 Speaker 1: sort of Q and A with Stacy. Maybe, uh, maybe 854 00:40:50,360 --> 00:40:52,120 Speaker 1: we should get to a clubhouse. We could do a 855 00:40:52,160 --> 00:40:55,320 Speaker 1: clubhouse with You said you hate clubhouse, but this is 856 00:40:55,320 --> 00:40:57,279 Speaker 1: a legitimate you just a hater. But you know what 857 00:40:57,520 --> 00:40:59,640 Speaker 1: or what do we do, like am I think we 858 00:40:59,680 --> 00:41:01,960 Speaker 1: should we should do like one of our streaming episodes 859 00:41:02,000 --> 00:41:04,480 Speaker 1: with Stacy and then take people's questions. But you know, 860 00:41:04,600 --> 00:41:07,000 Speaker 1: the other the thing is that I really like. I mean, 861 00:41:07,080 --> 00:41:10,359 Speaker 1: obviously he does a good job of explaining how there's 862 00:41:10,400 --> 00:41:15,439 Speaker 1: like two proximate causes for the cute shortage, and one 863 00:41:15,600 --> 00:41:19,440 Speaker 1: is the sort of distinct situation that happened with autos 864 00:41:19,760 --> 00:41:22,040 Speaker 1: where they canceled a bunch of orders and then scrambled 865 00:41:22,040 --> 00:41:24,320 Speaker 1: when they realized that auto demand was off the charts, 866 00:41:24,840 --> 00:41:27,160 Speaker 1: and then just the fact that the demand for everything 867 00:41:27,239 --> 00:41:29,759 Speaker 1: else was off the charts. I mean hearing him describe 868 00:41:29,760 --> 00:41:34,239 Speaker 1: buying for uh that books, tablets or whatever was for 869 00:41:34,400 --> 00:41:37,440 Speaker 1: his kids and everyone by you know, new monitors and 870 00:41:37,520 --> 00:41:40,480 Speaker 1: new computers at home and five G and ai and 871 00:41:40,680 --> 00:41:44,279 Speaker 1: video games and PS fives and all that stuff. So 872 00:41:44,360 --> 00:41:46,560 Speaker 1: you can really see there is essentially like two things 873 00:41:46,880 --> 00:41:50,560 Speaker 1: that came together at once. They're just totally overloading the 874 00:41:50,640 --> 00:41:53,799 Speaker 1: system right now. Yeah, I mean, this I think gets 875 00:41:53,880 --> 00:41:57,520 Speaker 1: back to the uniqueness of the downturn that we just saw, 876 00:41:57,840 --> 00:42:02,000 Speaker 1: right Everyone was sort of treating it like a normal recession. Yeah, 877 00:42:02,440 --> 00:42:05,439 Speaker 1: but it really isn't a normal recession, and we saw 878 00:42:05,840 --> 00:42:09,480 Speaker 1: consumer demand in many ways was much much stronger than 879 00:42:09,600 --> 00:42:12,920 Speaker 1: people might have expected. Well, you know something I was 880 00:42:12,960 --> 00:42:14,719 Speaker 1: thinking about early on, and this should have been my 881 00:42:14,800 --> 00:42:16,239 Speaker 1: clue that we're going to get this sort of more 882 00:42:16,360 --> 00:42:19,759 Speaker 1: robust recovery than we realized. I thought to myself, it's like, man, 883 00:42:19,840 --> 00:42:23,719 Speaker 1: there's never been an economic downturn that was so expensive, 884 00:42:23,800 --> 00:42:25,520 Speaker 1: Like because everyone I just had to go out and 885 00:42:25,560 --> 00:42:27,759 Speaker 1: buy a bunch of stuff, right, so you like go out. 886 00:42:28,120 --> 00:42:29,800 Speaker 1: A few episodes I talked about how I was like, 887 00:42:30,040 --> 00:42:32,959 Speaker 1: went out and bought a bunch bunch of sardines. People 888 00:42:33,000 --> 00:42:36,560 Speaker 1: bought toilet paper, people bought uh, you know, kittie pools 889 00:42:36,600 --> 00:42:39,040 Speaker 1: for their backyards so that their kids wouldn't go crazy 890 00:42:39,080 --> 00:42:42,319 Speaker 1: computers like it would We would never have recessions if 891 00:42:42,400 --> 00:42:45,600 Speaker 1: every recession required people to spend a bunch of money. 892 00:42:46,080 --> 00:42:47,520 Speaker 1: But this one, who was like, we had this huge 893 00:42:47,560 --> 00:42:50,480 Speaker 1: downturn and it was very expensive, and so it's like 894 00:42:50,880 --> 00:42:54,320 Speaker 1: the stabilizing mechanism of more spending kicked in in a 895 00:42:54,400 --> 00:42:57,480 Speaker 1: way automatically. Of course, the fiscal stimulus helped too, but 896 00:42:57,600 --> 00:43:01,000 Speaker 1: obviously the tech industry and chips in particular, one of 897 00:43:01,040 --> 00:43:04,279 Speaker 1: the huge beneficiaries of that sort of for spending that 898 00:43:04,440 --> 00:43:07,160 Speaker 1: lots of people had to do right away. Yeah, that's 899 00:43:07,280 --> 00:43:09,200 Speaker 1: a good way of looking at it. Um, I guess 900 00:43:09,239 --> 00:43:12,920 Speaker 1: you had like a lot of displaced services, um that 901 00:43:13,000 --> 00:43:14,840 Speaker 1: you could no longer go to, right so you couldn't 902 00:43:14,840 --> 00:43:17,319 Speaker 1: go to restaurants, you can't go to schools, you can 903 00:43:17,400 --> 00:43:19,040 Speaker 1: go to your workplace, and so you kind of had 904 00:43:19,080 --> 00:43:21,799 Speaker 1: to recreate a lot of those at your home if 905 00:43:21,840 --> 00:43:24,320 Speaker 1: you have the means to do so, obviously, and basically 906 00:43:24,360 --> 00:43:28,080 Speaker 1: you had a sort of like double demand for um 907 00:43:28,840 --> 00:43:32,120 Speaker 1: goods that would enable you to do that pretty extraordinary. 908 00:43:32,120 --> 00:43:35,680 Speaker 1: And then of course, you know, obviously beyond the acute thing, um, 909 00:43:36,800 --> 00:43:40,000 Speaker 1: it really does seem like the sort of supply constraints, 910 00:43:40,600 --> 00:43:46,120 Speaker 1: as judged by that huge Taiwan semi cap forecast for 911 00:43:46,200 --> 00:43:49,080 Speaker 1: the coming year, like that part isn't going away. So 912 00:43:49,280 --> 00:43:52,160 Speaker 1: even if okay, maybe in a couple of quarters or whatever, 913 00:43:52,320 --> 00:43:55,279 Speaker 1: the car cycle is back and everything, and maybe some 914 00:43:55,400 --> 00:43:58,200 Speaker 1: of this one off demand, you know, I don't think 915 00:43:58,239 --> 00:44:00,960 Speaker 1: Stacy is going to be by for new netbooks for 916 00:44:01,080 --> 00:44:03,920 Speaker 1: his kids this year, so some of that one off 917 00:44:04,000 --> 00:44:08,480 Speaker 1: demand will fade. It really doesn't seem like, um, that's 918 00:44:08,560 --> 00:44:11,839 Speaker 1: going the broader story of like how much demand there 919 00:44:11,920 --> 00:44:15,839 Speaker 1: is for chipped overall, It is gonna go away anytime soon, 920 00:44:16,040 --> 00:44:17,880 Speaker 1: and so we still are going to be left with 921 00:44:17,920 --> 00:44:21,200 Speaker 1: his issues of the world extremely reliant on a couple 922 00:44:21,239 --> 00:44:25,040 Speaker 1: of manufacturers in both a physical and a geopolitical hotspot. 923 00:44:25,640 --> 00:44:27,719 Speaker 1: That's your way of saying that we're going to be 924 00:44:27,800 --> 00:44:31,799 Speaker 1: recording semi conductor episodes for the next ten years. Yeah, 925 00:44:32,120 --> 00:44:36,640 Speaker 1: that is basically that. Okay, all right, shall we leave 926 00:44:36,680 --> 00:44:40,120 Speaker 1: it there. This has been another episode of the All 927 00:44:40,200 --> 00:44:43,080 Speaker 1: Thoughts podcast. I'm Tracy Alloway. You can follow me on 928 00:44:43,239 --> 00:44:46,640 Speaker 1: Twitter at Tracy Alloway and I'm Joe wisn't thought You 929 00:44:46,680 --> 00:44:50,080 Speaker 1: could follow me on Twitter at the Stalwart. Follow Stacy 930 00:44:50,239 --> 00:44:54,280 Speaker 1: on Twitter at s Raskin. Follow our producer Laura Carlson. 931 00:44:54,440 --> 00:44:57,640 Speaker 1: She's at Laura M. Carlson. Follow the Bloomberg head of 932 00:44:57,680 --> 00:45:01,680 Speaker 1: podcast Francesco Levi at Francesca Today, and check out all 933 00:45:01,719 --> 00:45:05,440 Speaker 1: of our podcasts at Bloomberg under the handle at podcasts. 934 00:45:05,800 --> 00:45:06,520 Speaker 1: Thanks for listening.