Comment by dathinab | Hacker News Reader

Comment by dathinab | Hacker News Reader

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While there are not many competitors, they still do (most times) properly compete due to various factors like pressure from their customer (some very very large with the capabilities to become a competition iff they stop innovating and/or become to expensive), but also factors like political pressure to stay ahead of mainland china.

Through TSMC for example has margin >40%. Which isn't that surprising I mean there is not much competition. Intel doesn't (yet) provide their capabilities to anyone else, and the other competition is behind enough to not be an option for many things, especially high end and/or high efficiency.

What is quite fascinating is that while TSMC is a close to monopoly(/duopoly if you count Intel) in many sectors and takes advantage of it they seem to have successfully resisted the common problem of such companies stopping/slowing innovation and similar problem. I'm not sure if it's related to the additional pressure of them being on of the main lifelines for Taiwan or if they have just pretty good management or if it's because they still competition oligopoly main customers do push them to do so.

i suspect that TSMC doesn't have as big a monopoly as you've made it out to be, not because intel is competing, but because the customers of TSMC are large enough that they "force" the innovation (aka, they "threaten" to not use them if they stop innovating).

Also, TSMC hasn't been around long enough to become the slow behemoths that other big monopolies have become.

I think it's just a matter of 'if you stop innovating, others will catch up quicker than you expect'. It's a continual r&d March, and you don't want to end up like Intel and get stuck on 14nm forever

And Intel was a company that was still shoving billions into r&d, yet still got stuck

So much of the tech industry has Moore's law baked into the supply chain forecasts, so lots of incentive to deliver on it.

TSMC doesn’t have a real monopoly, they’re just a few years ahead of everyone else in integrating ASML’s latest tech. Samsung and Intel aren’t very far behind. The more money TSMC charges the more incentive the others have to catch up but they can only move so fast. GlobalFoundries and STMicroelectronics seem stuck in the double digits.

It makes a big difference to a few competitive customers so TSMC gets paid well for that first mover advantage, but yeah it’s not well secured monopoly.

thinking that TSMC is "just" integrating ASML tech is a common but big misconception

ASML tech is a tool, one essential for new better chips but not sufficient

You also need to have a lot of know how about how to best use the tool, integrate it in workflows etc. where TSMC seems to be somehow ahead of Intel.

Additionally the custom tooling in the steps leading up to the use of ASML tooling are also hugely important and TSMC is quite a bit ahead of intel with that. It turned out having multiple different customers with different needs which all collaborate with TSMC to optimize the tools in their workflows.

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