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> Fundamentally, you cannot be both an IP creator (eg. Design) and chip fabricator, as both functions have different economics and competitive structures, and o
by klooney 2y ago
> Fundamentally, you cannot be both an IP creator (eg. Design) and chip fabricator, as both functions have different economics and competitive structures, and one BU inevitabely holds the other back.
Vertical integration can win too, it worked for Intel for decades.
- alephnerd 2y agoUntil it didn't. Most players in the hardware industry try to specialize in one function and do that very well, as this builds your competitive advantage AND allows you to leverage partnerships to further enhance your moat by building an ecosystem. For example, ARM is purely design driven - targeted specifically at low power compute usecases - and licensed it's IP out to just about any player, which allowed an ecosystem to develop. Nvidia did the same thing by remaining fabless and only concentrating on GPUs. TSMC concentrates only on fabrication and doesn't dare enter design because they know all their customers would leave overnight because they would not want to subsidize a potential competitor. Intel was in too many segments, which meant it was inevitably competing with everybody, which forced everyone to leverage partnerships to challenge the big baddie. A similar thing happened to Samsung to a certain extent as well.