Charlie Munger On Chip Stocks | Intel May Never Catch TSM

Charlie Munger On Chip Stocks | Intel May Never Catch TSM

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[WinningFinancially]

As someone living in Taiwan for the past 10 years I hav to say that TSMC is a beast of a company

[UrbanJournal]

I mentioned this on a past video you did on Intel. Intel is an IDM and were the King of the industry.

Now chip designing is primarily in the the western hemisphere and chip manufacturing is in the Eastern hemisphere.

Intel is an IDM so they design and manufacture. Since they do both they’re splitting their capital between growth capex to Chase TSM and R&D cost to Chase AMD.

I just believe their business model isn’t fit to be the world leader anymore. At one point the do it all approach was king, and tbh they created it.

[oldgary]

Intel and TSMC are different types of good companies. Intel is a branded company so it has many competitors. TSMC is a pure IC manufacturer and currently there is no other same company to compete with. Simply put, TSMC will not compete with foundry customers. But it is not easy for Intel and Samsung to do this.

[mikem]

This is why Buffett loves See's Candies and Coca Cola. Much of Operating Profit turns into cash flow. Semis very boom/bust. Semi stocks are better to trade than as long term investments.

[maxjames]

Yes, they do have to re-invest a lot of that into the business again and again, but they also generate more and more revenue and more and more FCF each year. The beauty is that there are only going to be a couple players because it takes 100s of billions to get into this industry and make a real difference. Also, this industry keeps growing like crazy and every thing they sell now is worthless in X years, so consumers have to keep buying new chips all the time.

The industries will explode. Self driving cars, cloud, VR and AR, humanoids, AI. All this is rapidly growing. I do agree, if you don't know how a CPU or GPU works, and what the difference is between those, how they are made etc, then you should not be investing in this industry. I doubt Munger knows this, but i could be wrong.

It's actually not that hard to learn all this and very interesting in this world we are living in. Also i think at least some basic understandings of how CPU's and GPU's work will help with a lot of other investments than contain those parts.

[babyprinceuk]

Spot on! Thanks!
Yeah this can be a deal breaker. So it’s sort of, they must put that money for capex and in return they are having increasing revenue and income….
It can be a winner. Maybe! Maybe not!
Well not for me for now.
Thanks for the highlight

[shk]

In todays world, it is very important to keep investing in your business to remain competitive. Their could be exceptions but I doubt you will get exceptional cashflow out of those businesses for a long period. And these sort of business can be entered into by any company because they are less capital intensive. All great business in the last 2 decades are those who have constantly reinvested (google, microsoft, Amazon etc.) into their operations to be ahead of others, particularly those that are in the IT related business. Reinvesting cashflow is minimal for non IT businesses where most investment is at early stage to build brand e.g. coca cola, pepsi, walmart, LV etc. This is my understanding, let me know your views on this please.

[prasad]

Intel can do anything with right leadership.

[root]

Intel was the Taiwan semiconductor company of the past, that's all I need to know

[leonardoruiz]

Look Charlie does not know enough of semiconductors Intel is not that far behind you have to look at the new products and what they have promised and the technologues they are develipong

[fribonla]

I have been investing for ten years and i often find myself hardly truly completely understand a company. Any company can have hidden risk, if i have to understand a company like i own it, there will be nothing i can invest. I do my research and dont investing without knowing anything about the company, but i accept that i'm just an amateur investor, my knowledge is very limited and will always be limited, what i can do is to reduce my risk through diversification.