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Software R&D is a special type of capex, in principal - successful R&D execution buys recurring free cash flow in near perpetuity. Contrast this with TSMC who n
by lumost 3y ago
Software R&D is a special type of capex, in principal - successful R&D execution buys recurring free cash flow in near perpetuity. Contrast this with TSMC who needs to outlay ~50 Billion every 2 years on a new Fab which will deprecate over ~6-7 years. If TSMC stopped buying fabs, then intel would beat them in ~2 years time - and TSMC would be out of business in 6-7 years.
Software R&D may be less efficient then the above math would imply, but there is a big range between perpetuity and some depreciating time horizon. R&D can also boosts growth prospects by expanding markets.
- Sohcahtoa82 3y ago> Contrast this with TSMC who needs to outlay ~50 Billion every 2 years on a new Fab which will deprecate over ~6-7 years. Oof, that's the bit I forgot. TSMC's CapEx isn't just expansion, it's replacement. They're constantly upgrading to manufacture new technologies. It makes sense now, thank you.