3 ms·

> And then what? Just stockpile a year of everything? Or run a fab. Fabless isn't a God-given right. Vertical integration is a thing. Vertical integration g

by bsder 5y ago

> And then what? Just stockpile a year of everything? Or run a fab. Fabless isn't a God-given right. Vertical integration is a thing. Vertical integration got a bad reputation because financial engineering dipshits like Carl Icahn would come in and strip mine your company for the single super profitable division and destroy the rest (see: Mesta Machinery).

hef19898 5y ago
Sure, that's a solution. Or own one as subsidiary. Not sure if would have really helped so, there were decisions to order less. Reasonable to assume that production at the own fans would have been ramped down as well.
- bsder 5y ago
  Sure, but your own fab will prioritize your own chips in the order that they need to. TI doesn't care about that 50 cent part that's holding up your ability to produce a car. They're going to run every chip first whose profit per chip is higher than yours. On the other hand, your own managers will have lots of incentive to produce that 50 cent chip if it is in the way of several thousand dollars of profit from selling a new vehicle. 200/150mm wafer at 180/150nm node fabs are not that expensive to run and maintain. But they have annual capex and MBA types don't like that. In addition, that fab probably won't compete well in the general market so it's effectively a captive fab. However, you'll have internal managers complaining that they have to use the internal chip which is more expensive than the one from TSMC because their bonus depends upon getting 5% cost savings next quarter and who the hell cares about keeping our fab filled so it's around when everything goes pear-shaped--that's somebody else's problem after I've been promoted and gone.
  - hef19898 5y ago
    Automotive suppliers pretty much care about 50 cent parts holding up OEMs, penalties are prohibitively high for a reason. An in-house fab is, as you said, probably more expensive. Simply because it has to rely on a single customer. Show me one company that is not looking at costs, one way or the other, that stays in business in the long run. Not doing so has, yes, something to do with savings on the procurement side (errors were made there as much as everywhere else). It also has something to do with long-term survival, and that does include jobs (even if that turned into a trope by now, there is some truth to it). Not every company can use VC money to bolster competitiveness, most have to compete on cost, and there every cent counts. Especially when we talk about high-volume products.
    - bsder 5y ago
      > penalties are prohibitively high for a reason Which works, until your supplier is simply willing to go bankrupt. And you still have no chips and can't ship anything. > most have to compete on cost, and there every cent counts. Until you can't ship and everything grinds to a halt. Risk reduction has a cost and nobody is willing to pay it because it doesn't enter the balance sheet.

by bsder 5y ago

hef19898 5y ago

Sure, that's a solution. Or own one as subsidiary. Not sure if would have really helped so, there were decisions to order less. Reasonable to assume that production at the own fans would have been ramped down as well.

bsder 5y ago
Sure, but your own fab will prioritize your own chips in the order that they need to. TI doesn't care about that 50 cent part that's holding up your ability to produce a car. They're going to run every chip first whose profit per chip is higher than yours. On the other hand, your own managers will have lots of incentive to produce that 50 cent chip if it is in the way of several thousand dollars of profit from selling a new vehicle. 200/150mm wafer at 180/150nm node fabs are not that expensive to run and maintain. But they have annual capex and MBA types don't like that. In addition, that fab probably won't compete well in the general market so it's effectively a captive fab. However, you'll have internal managers complaining that they have to use the internal chip which is more expensive than the one from TSMC because their bonus depends upon getting 5% cost savings next quarter and who the hell cares about keeping our fab filled so it's around when everything goes pear-shaped--that's somebody else's problem after I've been promoted and gone.
- hef19898 5y ago
  Automotive suppliers pretty much care about 50 cent parts holding up OEMs, penalties are prohibitively high for a reason. An in-house fab is, as you said, probably more expensive. Simply because it has to rely on a single customer. Show me one company that is not looking at costs, one way or the other, that stays in business in the long run. Not doing so has, yes, something to do with savings on the procurement side (errors were made there as much as everywhere else). It also has something to do with long-term survival, and that does include jobs (even if that turned into a trope by now, there is some truth to it). Not every company can use VC money to bolster competitiveness, most have to compete on cost, and there every cent counts. Especially when we talk about high-volume products.
  - bsder 5y ago
    > penalties are prohibitively high for a reason Which works, until your supplier is simply willing to go bankrupt. And you still have no chips and can't ship anything. > most have to compete on cost, and there every cent counts. Until you can't ship and everything grinds to a halt. Risk reduction has a cost and nobody is willing to pay it because it doesn't enter the balance sheet.