Today we cover the last episode of "The Chip Warriors" podcast by Craig Addison. This episode focused on Taiwan's entry into the semiconductor industry. I suggest that you listen to the episode first, and then read this post to get additional information on the topics mentioned by the hosts.
Here is the link to Episode 5, "The Chip Warriors - Bonus - Taiwan." The podcast is also available on Apple Podcasts and Spotify.
Disclaimer: The podcast and videos in this post do not belong to us. The video creators are mentioned in each video, and Craig Addison is behind the podcast.
At the 1:28 mark of the podcast, Morris Chang is mentioned. Although Morris Chang is not a household name, he is one of the most influential CEO's in the modern era because of his impact on technology and the semiconductor industry.
The video below provides Morris Chang's perspective on Taiwan's rise in the semiconductor industry, ITRI (Industrial Technology Research Institute), RCA, and other topics mentioned throughout the podcast. He is a very charismatic and entertaining CEO.
Business Note from the Morris Chang Video.
[4:54 of video] A potential barrier to entry for companies entering the semiconductor industry is the need for 40-50% gross profit margins. Below 40-50%, it is hard to invest in marketing and research & development. The need for high margins limits the number of companies that can enter the business because many of them won't be able to generate sales fast enough to create and maintain high margins.
Revenue - Expenses = Gross Profit
Gross Profit ÷ Revenue = Gross Profit Margin
At the 8:13 mark of the Chip Warriors episode, Addison mentions an interview with Don Brooks that was done by Stanford's Silicon Genesis Project. The interview is informative because it highlights the business model of semiconductor manufacturers, and also provides some good management lessons.
If the video below does not show on mobile, try watching it on a desktop computer.
Business Notes from the Don Brooks Video.
[5:12 of the video] It is dangerous to vertically integrate a company while increasing the number of markets it operates in at the same time.
[8:03 of the video] Companies should exit non-core businesses in order to focus on their core strengths. Intel left the memory business in the 80's so they could focus on their CPU business. This pivot made the company very successful. Sometimes we need to go deeper, not wider.
[23:05 of the video] Here is the link to a 1987 NYTimes article discussing the failed merger between Fujitsu and Fairchilds that Don Brooks brings up. JAPANESE PURCHASE OF CHIP MAKER CANCELED AFTER OBJECTIONS IN U.S.
[42:04 of the video] Taiwan was able to unify their country around semiconductors, and today the country is a dominant force in the industry because of that unity.
[46:15 of the video] One of TSMC's competitive advantages is having their manufacturing facilities (fabs) located close to each other in Taiwan. By coming to the US, they might be forfeiting one of their competitive advantages, and their fabs might not meet expectations.
At the 17:03 mark of the Chip Warriors podcast, Alan Patterson mentioned RCA poisoning their workers in Taiwan. In 2015, RCA had to pay 560 million Taiwan dollars ($18 million US) to their former workers. This was the largest payment for a workplace injury case in Taiwan.
Conclusion
Today we reviewed the last episode of the Chip Warriors series, and I thank Craig Addison for documenting the events and players in the semiconductor industry. Listening to the series increased my understanding of the industry by leaps and bounds.
Next week, I will review Intel's fourth quarter results. They are doing a conference call on Thursday, January 25 at 5 pm EST.
Here is the link to register for the call. Sign up for conference call.
Stay strong, stay blessed, and God willing, I will see you next week.
In his grace, God has given us different gifts for doing certain things well. So if God has given you the ability to prophesy, speak out with as much faith as God has given you. If your gift is serving others, serve them well. If you are a teacher, teach well. If your gift is to encourage others, be encouraging. If it is giving, give generously. If God has given you leadership ability, take the responsibility seriously. And if you have a gift for showing kindness to others, do it gladly.
Romans 12:6-8 NLT
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