4 ms·

Microsoft has 6x the cash on hand compared to Intel, 7x the market cap, and roughly 3.5x less debt-as-a-percentage-of-market-cap. $100 billion is nearly 40% of

by ykl 6y ago

Microsoft has 6x the cash on hand compared to Intel, 7x the market cap, and roughly 3.5x less debt-as-a-percentage-of-market-cap. $100 billion is nearly 40% of Intel's total market cap; $10 billion is less than half of a percent of Microsoft's total market cap. Basically, Microsoft is just much much bigger and has much much more cash on hand and much much more ability to raise debt compared to Intel. All of these factors mean that relatively speaking, $10 billion to Microsoft is a sum that would barely even make a blip on their annual results; $100 billion is life-or-death for Intel. I don't think it's clear that Intel would even be able to scrounge up $100 billion if they had to.

amelius 6y ago
This makes me wonder why Microsoft doesn't invest more in semiconductor tech. Microsoft and Intel's interests are very much aligned, and they have a common competitor (Apple) who is ahead of them both.
- nightowl_games 6y ago
  I've been theorizing that Microsoft could get involved in the move to build a high end fab stateside, mostly cause they are already well integrated in the military industrial complex.
  - buu700 6y ago
    Alternatively, Microsoft could acquire the x86 business from Intel and then invest in Intel as a dedicated foundry. Although, that raises the question of whether MS would be better off staying married to x86 long-term or moving in the direction of Apple Silicon / Rosetta. I'm inclined to think that they would be best served by sticking with x86 long-term for the sake of optimal backwards-compatibility, so long as there isn't some inherent reason for the x86 instruction set to be dramatically less efficient than ARM. I don't see why they couldn't ultimately catch up to or at least become competitive with Apple by pushing development and adoption of x86 SOCs alongside standards like Evo, which their taking over the business could potentially help accelerate.
- ralfd 6y ago
  Apple has at best 10% market share in personal computers. Microsoft has a monopoly; a move into Microsoft Silicon would invite anti-trust scrutiny.
  - dstaley 6y ago
    If you stretch the definition of "personal computers", Apple actually has about 45% of the market in the US. Microsoft only has 30%.[1] [1] https://gs.statcounter.com/os-market-share/all/united-states-of-america https://gs.statcounter.com/os-market-share/all/united-states...
    - vkou 6y ago
      You can stretch it, but would you risk five hundred billion dollars on the judge agreeing with that stretch? I wouldn't.
    - ChuckNorris89 6y ago
      You can stretch it all you want but while iPhones may have powerful CPUs that could qualify them as "computers" they're not general purpose computers, so while I could use them to write an email and book a train ticket, I can't do any school or office work on them and iPads mostly remain Netflix/youtube/redit browsing devices for the couch after the honeymoon period is over so can you really put them in the same category as "computers"? My smart fridge also has a powerful ARM CPU and a touchscreen and a modern OS. Is it also a computer? Can I use it for productive work? Doe every wearable and IoT device qualify as a "computer"? So sticking back to general purpose computers that are not locked in a vendor ecosystem and let you install and run whatever you want from whatever sources, Apple is less than 10%, so yeah, with ~80% marketshare Microsoft is basically a monopoly in that space.
  - UncleOxidant 6y ago
    I think right now any US company that can step up to the plate and fund fabs will get a green light. We're in pretty dire straits right now and this semiconductor shortage is going to last for a while.
- ykl 6y ago
  I think there are two parts to this answer: the fabless component (meaning designing chips), and the fab component (meaning manufacturing chips). Taking Apple as an example: Apple is fully in the fabless part with Apple Silicon, but Apple has no in-house fab component (they outsource the chip manufacturing to TSMC). For the chip design part, Microsoft to some degree is already doing this. Microsoft has worked with AMD and Qualcomm to design custom chips for things like the XBox and Surface devices, and word on the street is that Microsoft is moving into designing their own ARM chips top-to-bottom similar to Apple [1]. I think moving into custom chip design is no brainer for all of the tech players with a market cap > $1 trillion, and as far as I'm aware, most of them are already doing it. The second part is the much trickier part. Actually getting into the fab business at a cutting edge process node is extremely difficult, because the fab business is both extremely capital intensive AND takes an enormous amount of time to build up. If Microsoft or any other tech player wanted to muscle their way into the cutting edge fab business, the requirement isn't a one-time $20 billion investment; it's $20 billion a year every year for at least a decade just to catch up. The catching up part is insanely difficult too; for starters, the EUV photolithography machines you need to even begin building a fab are made by only like two companies in the world, and both companies are backordered for years because of TSMC, Samsung, Intel, and others. Then, once you have caught up, you have to continue pouring money into the business forever in order to keep up. TSMC and Samsung and (up until recently) Intel are able to do this because of the sheer volume of manufacturing they do; smaller fabs that don't have the volume just aren't able to keep up because they don't have the revenue. The fab business is a business where economies of scale are really serious and really large, and I don't think Microsoft alone is at a scale large enough to for these economies of scale to start to take effect. Even established chip players like NVIDIA and AMD don't even consider themselves large enough for these economies of scale to apply today. So the question for Microsoft (and really any fabless chip company) really basically boils down to: do they commit to $20 billion a year every year indefinitely until the end of time to build and run their own in-house cutting edge fab business, or do they just pay TSMC each year to manufacture for them, and thereby offload the risk and cost of the fab business? The overwhelming answer in the industry is: just pay TSMC. That's what Apple, Google, Amazon, NVIDIA, AMD, Qualcomm, etc. all do. [1] https://www.theverge.com/2020/12/18/22189450/microsoft-arm-processors-chips-servers-surface-report https://www.theverge.com/2020/12/18/22189450/microsoft-arm-p...

by ykl 6y ago

amelius 6y ago

This makes me wonder why Microsoft doesn't invest more in semiconductor tech. Microsoft and Intel's interests are very much aligned, and they have a common competitor (Apple) who is ahead of them both.

nightowl_games 6y ago
I've been theorizing that Microsoft could get involved in the move to build a high end fab stateside, mostly cause they are already well integrated in the military industrial complex.
- buu700 6y ago
  Alternatively, Microsoft could acquire the x86 business from Intel and then invest in Intel as a dedicated foundry. Although, that raises the question of whether MS would be better off staying married to x86 long-term or moving in the direction of Apple Silicon / Rosetta. I'm inclined to think that they would be best served by sticking with x86 long-term for the sake of optimal backwards-compatibility, so long as there isn't some inherent reason for the x86 instruction set to be dramatically less efficient than ARM. I don't see why they couldn't ultimately catch up to or at least become competitive with Apple by pushing development and adoption of x86 SOCs alongside standards like Evo, which their taking over the business could potentially help accelerate.
ralfd 6y ago
Apple has at best 10% market share in personal computers. Microsoft has a monopoly; a move into Microsoft Silicon would invite anti-trust scrutiny.
- dstaley 6y ago
  If you stretch the definition of "personal computers", Apple actually has about 45% of the market in the US. Microsoft only has 30%.[1] [1] https://gs.statcounter.com/os-market-share/all/united-states-of-america https://gs.statcounter.com/os-market-share/all/united-states...
  - vkou 6y ago
    You can stretch it, but would you risk five hundred billion dollars on the judge agreeing with that stretch? I wouldn't.
  - ChuckNorris89 6y ago
    You can stretch it all you want but while iPhones may have powerful CPUs that could qualify them as "computers" they're not general purpose computers, so while I could use them to write an email and book a train ticket, I can't do any school or office work on them and iPads mostly remain Netflix/youtube/redit browsing devices for the couch after the honeymoon period is over so can you really put them in the same category as "computers"? My smart fridge also has a powerful ARM CPU and a touchscreen and a modern OS. Is it also a computer? Can I use it for productive work? Doe every wearable and IoT device qualify as a "computer"? So sticking back to general purpose computers that are not locked in a vendor ecosystem and let you install and run whatever you want from whatever sources, Apple is less than 10%, so yeah, with ~80% marketshare Microsoft is basically a monopoly in that space.
- UncleOxidant 6y ago
  I think right now any US company that can step up to the plate and fund fabs will get a green light. We're in pretty dire straits right now and this semiconductor shortage is going to last for a while.
ykl 6y ago
I think there are two parts to this answer: the fabless component (meaning designing chips), and the fab component (meaning manufacturing chips). Taking Apple as an example: Apple is fully in the fabless part with Apple Silicon, but Apple has no in-house fab component (they outsource the chip manufacturing to TSMC). For the chip design part, Microsoft to some degree is already doing this. Microsoft has worked with AMD and Qualcomm to design custom chips for things like the XBox and Surface devices, and word on the street is that Microsoft is moving into designing their own ARM chips top-to-bottom similar to Apple [1]. I think moving into custom chip design is no brainer for all of the tech players with a market cap > $1 trillion, and as far as I'm aware, most of them are already doing it. The second part is the much trickier part. Actually getting into the fab business at a cutting edge process node is extremely difficult, because the fab business is both extremely capital intensive AND takes an enormous amount of time to build up. If Microsoft or any other tech player wanted to muscle their way into the cutting edge fab business, the requirement isn't a one-time $20 billion investment; it's $20 billion a year every year for at least a decade just to catch up. The catching up part is insanely difficult too; for starters, the EUV photolithography machines you need to even begin building a fab are made by only like two companies in the world, and both companies are backordered for years because of TSMC, Samsung, Intel, and others. Then, once you have caught up, you have to continue pouring money into the business forever in order to keep up. TSMC and Samsung and (up until recently) Intel are able to do this because of the sheer volume of manufacturing they do; smaller fabs that don't have the volume just aren't able to keep up because they don't have the revenue. The fab business is a business where economies of scale are really serious and really large, and I don't think Microsoft alone is at a scale large enough to for these economies of scale to start to take effect. Even established chip players like NVIDIA and AMD don't even consider themselves large enough for these economies of scale to apply today. So the question for Microsoft (and really any fabless chip company) really basically boils down to: do they commit to $20 billion a year every year indefinitely until the end of time to build and run their own in-house cutting edge fab business, or do they just pay TSMC each year to manufacture for them, and thereby offload the risk and cost of the fab business? The overwhelming answer in the industry is: just pay TSMC. That's what Apple, Google, Amazon, NVIDIA, AMD, Qualcomm, etc. all do. [1] https://www.theverge.com/2020/12/18/22189450/microsoft-arm-processors-chips-servers-surface-report https://www.theverge.com/2020/12/18/22189450/microsoft-arm-p...