Constellation Brands owns seven of the top 100 best-selling premium wine brands in the U.S., including Meiomi and Kim Crawford in the top ten.
Company Profile
Introduction
Constellation Brands (ticker: STZ) was founded in 1945 by Marvin Sands in the Finger Lakes region of New York as Canandaigua Industries. In 2000, the company changed its name to its current name.
Initial Public Offering
Constellation Brands’ predecessor was Canandaigua Wine Company, Inc., which went public in 1973.
Famous Investors
Berkshire purchased new shares of Constellation Brands in the fourth quarter of 2024. In total, Berkshire purchased more than 5.6 million shares of Constellation, and by the end of 2024, the position was worth approximately $1.24 billion.
Constellation’s Business
Business Scope
Constellation is an American beer, wine, and spirits producer and marketer. It is the largest beer importer in the United States by sales and the third largest (7.4%) of all major beer suppliers.
The company’s advantageous position
Constellation Brands owns seven of the top 100 best-selling premium wine brands in the U.S., including Meiomi and Kim Crawford in the top ten.
The industry is increasingly moving towards high-end brands. Since 2012, U.S. revenue from premium beer brands has grown from 33% to more than 60%, and Constellation saw this opportunity early on and positioned itself to benefit from it. The company’s brands contribute the majority of premium growth across the industry.
Brands owned by the company
Constellation owns more than 100 brands, including three categories:
Wine brands include Robert Mondavi, Kim Crawford, Meiomi, Simi Winery, Ruffino and The Prisoner Wine Company.
The beer portfolio includes imported brands such as Corona, Modelo Especial, Negra Modelo and Pacífico, for which it has U.S. rights, as well as American craft beer producer Funky Buddha.
Spirits brands include Casa Noble Tequila and High West Whisky, Nelson’s Green Brier Tennessee Whiskey.
Constellation previously imported Corona and other Modelo-branded products into the United States. The transaction includes full ownership of Crown Imports LLC. With this transaction, Constellation secured below rights:
Complete and independent control over all aspects of U.S. commercial operations.
Brewery in Mexico.
Received an exclusive perpetual brand license in the United States to import, market and sell Corona and Modelo branded products.
And are free to develop brand extensions and innovations for the U.S. market.
Currently, Constellation manufactures these products in Mexico for the U.S. market. The original Modelo Group provides services to all other countries, excluding the United States.
Marijuana for medical use
In 2017, the company began investing in medical marijuana by acquiring a 9.9% stake in Canopy Growth Corporation, one of Canada’s largest sellers of medical marijuana products.
However, Constellation Brands’ investment in Canopy did not yield the expected profit; the company hinted that it might exit the cannabis business in the future.
Operating Performance
2024 third quarter financial report
The company reported solid third-quarter sales of $2.4 billion, with net income up 21% year over year.
Spending tightening
The weak consumer spending environment has forced top brands to cut prices to drive demand. Investing in top consumer brands is often a good choice when the overall economy is weak. Eventually, consumer spending picked up again. Investors who bought top stocks at low prices have been handsomely rewarded in the economic recovery.
Tariff uncertainty
Additionally, tariffs on Mexican imports set to take effect April 2 add uncertainty to near-term demand trends. Still, Constellation’s beer business grew faster than the industry average in the third quarter, reflecting its strong brand strength.
Capital market performance
Stock price performance
Constellation Brands’ stock price plummeted in early 2025 after releasing its third-quarter earnings report ending November 2024, and the stock price has fallen about 16% so far in 2025; creating an attractive buying opportunity for interested and patient investors.
Market Valuation
Constellation Brands currently trades at 13 times this year’s consensus earnings estimate, which is a steal. Furthermore, the company pays out over 40% of its free cash flow in the form of dividends, giving it an above-average forward yield of 2.19%.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
After deducting everything you have considered, what remains is the risk. Or risk is what you didn’t expect.
People don’t want precision, they want certainty.
Because they are valuable, people usually take every possible measure to protect physical assets. Just because they have no price tag and cannot be traded, people ignore and cannot see things that are in fact more precious assets, such as vision, family affection, etc.
Stories are always more powerful than statistics. The best stories will win. Every equation you put in a book will cut sales in half.
Lansdale: One thing missing from the Department of Defense data is how the Vietnamese felt. Lansdale: One thing missing from the Department of Defense data is how the Vietnamese felt, and you can’t reduce it to a statistic or a chart.
Grant: Anyone who thinks that the value of a common stock is based entirely on DCF and earnings adjusted for marginal tax rates has forgotten that people once burned witches and started wars on impulse.
72 hours before the collapse of Lehman Brothers, the capital ratio, which is the main indicator for measuring banks’ ability to withstand losses, was 11.7%, better than the previous quarter and far better than Bank of America and Goldman Sachs.
Hayes: People who don’t read history think everything they see is unprecedented.
Good news takes time to develop, but bad news often comes in an instant.
Economic value is a simple idea: if someone wants something, it has value, no matter what the reason is.
The secret to doing good research is to be a little lazy.
There are five main reasons why competitive advantage fades.
A book is far more than what the author writes, it also contains everything you can imagine and understand.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
In the past, when TSMC was smaller, the operational risks and disadvantages faced by TSMC were not strictly examined. But as chips become more and more important, when “165 billions investment, TSMC moat and competitiveness is fragile”, the operational risks and disadvantages faced by TSMC have been fully exposed.
TSMC’s risks and disadvantages
In the past, when TSMC was smaller, the operational risks and disadvantages faced by TSMC were not strictly examined. But as chips become more and more important, when “165 billions investment, TSMC moat and competitiveness is fragile“, the operational risks and disadvantages faced by TSMC have been fully exposed.
Geopolitics
Any rational investor cannot ignore the geopolitical and potential military conflicts facing TSMC. After all, no one expects that the stocks they buy have a high probability of plummeting or even becoming wallpaper in the future, right?
According to his own later statements, he would sell mainly geopolitical risks, and therefore regretted and sold out TSMC after holding it for a very short period of time, which is a rare investment behavior of Buffett.
It is rare for Buffett to hold such a large number of shares in a company and then almost completely sell them off in less than a year (86% of TSMC shares were sold in the fourth quarter of 2022). If TSMC is not the only case, it is a rare case.
Earthquakes often occur in Taiwan
Wafers to be damaged and scrapped by Earthquakes
No matter how good the equipment, technology, production capacity, orders, and market are; precision wafer factories are most afraid of earthquakes. Once an earthquake occurs, the production line will need to be shut down for a comprehensive inspection if it is minor, and every wafer on all production lines must be scrapped if it is more serious. You can read it in my post of “How many fabs and houses does TSMC have currently and in the future?“, count how many wafer fabs TSMC has in Taiwan, the production capacity of each fab, and then multiply it by the cost of each wafer, and you will know how much money will be lost in an earthquake.
According to TSMC’s 2023 business overview, the 12-inch wafer equivalent shipments in 2024 will be approximately 13-14 million pieces. A wafer costs thousands of dollars or tens of thousands of dollars. For detailed quotes, please see my other post “The TSMC cost, sell price, and R&D cost of chip foundry“
Damaged three times in a year and a half
The following lists three media reports of major earthquakes in Taiwan in the past year and a half, as well as TSMC’s damage:
On January 21, 2025, TSMC experienced a 6.4 magnitude earthquake in the South Taiwan Science Park. TSMC’s 18 and 14 plants in the South Taiwan Science Park were reported to be severely damaged. The supply chain revealed that the number of fragments was as high as 60,000, and some equipment was displaced. When TSMC announced its January revenue on the 10th, it also made a rare statement about the impact of the January 21 earthquake on its first-quarter financial forecast, recognizing earthquake losses of NT$5.3 billion (US$165.63 million) in the first quarter.
On November 22, 2024, a magnitude 5.4 earthquake occurred in Tainan. According to the Southern Science Park Administration, some personnel in the clean room of TSMC’s Fab 18 were evacuated.
Within 10 hours of the main shock of the earthquake on April 3, 2024, the equipment recovery rate had exceeded 70%, and the recovery rate of the new plant had reached 80%. On April 18, TSMC announced the impact of the Hualien earthquake on April 3, and preliminarily estimated that it would recognize approximately NT$3 billion (approximately US$100 million) in earthquake-related losses in the second quarter after deducting insurance claims.
TSMC is located in Taiwan, where earthquakes often occur. In addition to the two major risks of geopolitics and possible military conflict in the Taiwan Strait, it is the operating risk that Wall Street is most concerned about. This is an operational risk that cannot be avoided in Taiwan.
Taiwan is already short of everything TSMC needs
The reason why it was forced to set up factories in the United States is not difficult to see for anyone in the semiconductor industry who lives in Taiwan: Taiwan was able to create TSMC in the past, and a very important reason is that Taiwan can provide TSMC with what it needs to grow and develop.
Government support
Since the establishment of TSMC, the Taiwanese government has provided endless policy support and relevant legislative amendments. But TSMC is now so large that it has caused dissatisfaction in the United States, and sooner or later it will impose antitrust measures against TSMC. Do you think the Taiwan government can protect TSMC with its capabilities? Let me remind you that there have been similar cases with HTC, Via, AU Optronics and Chi Mei Optoelectronics. The results were all tragedy. Please refer to my post of “The evil US, How did Japan, Alstom, Toshiba, HTC and Taiwan’s panel industry collapse ?“
Power shortage
Because the ruling party has made anti-nuclear power its policy, depite countries around the world have vigorously promoted nuclear power generation in recent years, ignoring the fact that Taiwan has been short of power in recent years and the cost of power generation has risen, after Taiwan will shut down its last nuclear power plant this year, power outages will occur more frequently in Taiwan, and the power shortage situation will become more severe───Even though the American Chamber of Commerce in Taiwan, the European Chamber of Commerce in Taiwan, and various Taiwanese business groups have repeatedly reported to the highest authorities in power, they remain unmoved.
Semiconductor factories require a large amount of water, but Taiwan’s wastewater recycling rate is notoriously low in the world, and industrial areas across Taiwan have been competing for water with agricultural areas. In short, Taiwan’s water resources are not only in short supply, but there are fundamental problems with their use, and there is no long-term plan or solution. For this part, please refer to my post of “Why is TSMC’s profit margin much greater than competitors?” .
Lack of labor
The number of people taking college entrance exams in Taiwan now is about one-third, even only a quarter of what it was thirty years ago. Foundries need more advanced manpower. TSMC and Taiwan’s technology sector need more engineers every year, and the number of science and engineering students graduating each year in Taiwan is almost insufficient.
In addition, the Taiwanese government is not like the government of thirty years ago that would carry out long-term planning, it has allowed the situation to escalate especially in past 2 decads. For a long time, there have been legal restrictions and rampant bureaucracy, no complete supporting plan, which have set limits on the import of senior white-collar workers from abroad, and the application process is cumbersome and cannot provide any immediate relief. According to statistics from a human resources website, the shortage of engineers in Taiwan’s semiconductor industry will exceed 26,000 in 2024.
Shortage of land
Except for a few prosperous areas in the United States, the cost of land access is very low and there is no shortage of land at all. However, Taiwan’s land resources are limited. The land required for wafer fabs is not ordinary large, and it cannot be too remote. There are many inherent limitations, and Taiwanese people like to protest and boycott to get benefits. Otherwise, why did TSMC’s expansion project in Taoyuan fail in the cradle?
However, Taiwan lacks all of these things now; from the perspective of business development, what choice will Taiwan make? The answer is easy.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
A large proportion of Chinese descent in world top chip companies, But you may have discovered the proportion of leaders of global semiconductor companies from mainland China is very low. Why?
I’ll review Chinese founder and CEO of world top semiconductor companies as far as I know.
Overview
A large proportion of Chinese descent in world top chip companies
You know, maybe you haven’t noticed: among the leaders of the most important global semiconductor companies in recent years, there are many famous Chinese founders and CEOs. This is very different from other fields, such as the software industry (You can refer to my post of “Indians are the CEOs of 30% of the Fortune 500 listed companies in the United States“). I mean the proportion of Chinese in the global leaders in “world’s top” semiconductor field. Chinese are not just a minority; they are the leaders of the world’s largest semiconductor companies.
Why is the proportion from mainland China so low?
You may have discovered that, although they are all Chinese, in the semiconductor industry, at least “for now”, excluding mainland Chinese companies, the proportion of leaders of global semiconductor companies from mainland China is very low. This is totally disproportionate to the proportion of mainland China in the world’s population, the number of people studying semiconductor-related majors in the United States, and their intelligence level.
The reason is simple: those who can become leaders or CEOs of the world’s top semiconductor companies are at least in their fifties, and those listed in this article are almost all between their sixties and eighties.
If you think back, excluding the twenty years of growing up and studying, forty to fifty years ago, very few people of that generation in mainland China had the opportunity to study, and many smart people might have been buried in this way for their entire lives. It is only about 40 years since the reform and opening up of mainland China. It is only in the last 20 to 30 years that mainland China has been truly wealthy and able to send children to college.
Morris Chang’s last position at Texas Instruments was as vice president in 1972. He left Texas Instruments because he encountered difficulties in career development at Texas Instruments. In 1983, he left Texas Instruments and joined General Instrument Company as chief operating officer.
It happened that the Taiwanese government at that time set industrial policies and needed to establish Taiwan’s own semiconductor industry. The Taiwanese government and Philips funded and assisted Morris Chang in establishing TSMC, specializing in semiconductor wafer manufacturing.
In 1985, at the invitation of Sun Yunxuan, he went to Taiwan to serve as the president of the ITRI (Industrial Technology Research Institute) and concurrently as the chairman of UMC.
On February 1, 1987, ITRI and Philips jointly established TSMC as chairman and CEO. In 1994, the world’s most advanced brand was founded. In 2005, he resigned as CEO of TSMC. Returned as CEO of TSMC in June 2009. He resigned from TSMC in June 2018 and officially retired.
Richard Chang is considered the true godfather of chip production in China. When he was young, he worked at Texas Instruments. In 1997, he decided to return to Taiwan to establish Vanguard International Semiconductor Corporation, which became the third largest wafer foundry at that time after TSMC and UMC. In 2000, without Richard Chang, the CEO of Vanguard International Semiconductor Corporation, knowing anything about it, under the leadership of the major shareholders, Vanguard International Semiconductor Corporation was sold to TSMC, which wanted to acquire it, for US$5 billion.
In 2000, Richard Chang went to mainland China to establish SMCI (Semiconductor Manufacturing International Corporation) and aggressively recruited TSMC talents. Soon after, he was sued by TSMC in California for infringement of business secrets. After years of litigation, the two parties reached a settlement at the end of 2009. Richard Chang also resigned sadly.
In 2021, Richard Chang founded Sien Integrated Semiconductor in Qingdao, with a total investment of approximately RMB 21.8 billion. It is the first collaborative integrated circuit manufacturing (CIDM) in mainland China. It initially focused on 12-inch 40 to 28 nanometer ultra-low power products. Production of consumer logic and embedded and RF-SOI advanced chip products.
UMC’s Robert Tsao
Robert Tsao is a Taiwanese entrepreneur and the founder of United Microelectronics (ticker: UMC). In 1976, ITRI signed a technology transfer licensing contract with RCA and joined the RCA project. Robert Tsao and others went to the United States to learn semiconductor production technology. In 1980, Taiwan’s first integrated circuit company, UMC, was established. Robert Tsao was transferred to the CEO and chairman.
Later, after a series of development and mergers and acquisitions, UMC became the world’s second largest wafer foundry, and was often compared with the world’s largest TSMC; Robert Tsao and TSMC’s chairman Morris Chang were also known as Taiwan’s chip foundry duo. In 2005, UMC was searched by the District Prosecutor’s Office for violating the Taiwan government’s Mainland China investment regulations by indirectly investing in Hejian Technology, and was charged with breach of trust and violation of the “Commercial Accounting Act.” Robert Tsao resigned as chairman of UMC.
Chip design
Nvidia’s Jensen Huang
Jensen Huang was born in Tainan. When he was 9 years old, he took a flight to the United States with his 10-year-old brother. He received a bachelor’s degree in electrical engineering from Oregon State University in 1984 and a master’s degree from the Institute of Electrical Engineering at Stanford University in the United States in 1992.
After graduation, he joined AMD and became a chip design engineer. Two years later, he moved to LSI Logic, focuses on chip graphics processing. After working in the design department for two years at LSI Logic, he asked to be transferred to the sales department, and eventually became the general manager of the SoC integrated chip department.
At the same time, he also received a master’s degree from Stanford University and met two engineers from Sun Microsystems, Chris Malachowsky and Curtis Priem. Two engineers who had worked at Sun Microsystems, Chris and Praiam, brought Jensen Huang into Nvidia’s entrepreneurial team.
At the end of 1992, when he was 30 years old, they co-founded Nvidia, focusing on the video game industry market. Because of his technical background and understanding of sales and management, Jensen Huang was elected as president and CEO, two positions he has held to this day.
In 1999, Nvidia invented the graphics display chip. This invention defined modern computer graphics and brought changes to parallel computing and its scientific applications. At the same time, Nvidia also opened the door to the field of artificial intelligence, using GPUs to allow computers and robots to and self-driving cars. Over the past 25 years, Jensen Huang has led Nvidia to transform from a chip company focusing on the video game industry to the current high-performance computing chip company, and has gradually become one of the most important semiconductor companies in the world.
The U.S. Semiconductor Industry Association (SIA) awarded Jensen Huang an award symbolizing the chip industry’s highest honor in 2021 to recognize his contribution to the semiconductor industry.
SIA President and CEO John Neuffer said in a statement: “Jensen Huang’s extraordinary vision and tireless execution have greatly strengthened our industry, revolutionized computing, and advanced artificial intelligence.” and “Jensen’s accomplishments have fueled countless innovations — from gaming to scientific computing to self-driving cars — and he continues to advance technologies that will transform our industry and the world. We’re pleased to recognize Jensen with the 2021 Robert N. Noyce Award for his many achievements in advancing semiconductor technology.”
Broadcom’s Tan Hock Eeng
Tan Hock Eeng is a Malaysian-born Chinese. He holds a PhD in mechanical engineering from MIT and a master’s degree in business administration from Harvard University. Therefore, in addition to having a background in science and engineering, Tan Hock Eeng is also familiar with financial management and business operations.
He successively worked as a financial executive at General Motors and PepsiCo. He then served as Managing Director of Hume Industrial Pacven Investment Company. In 1992, he moved to the personal computer manufacturer Commodore (acquired by Cavco Industries) as the company’s vice president. At this time, Tan Hock Eeng began to enter the technology industry.
In 1994, Tan Hock Eeng joined Integrated Circuit Systems and rose to the CEO position. Later, ICS was sold to Integrated Device Technology, and he joined IDT and served as chairman of the board of directors of IDT. Finally, in March 2006, Tan Hock Eeng served as the president of Avago (ticker: AVGO) until now.
In 2016, he led Avago Technologies to acquire Broadcom Technology for US$37 billion, and also acquired the communications giant Brocade, becoming the fifth largest semiconductor manufacturer in the world. In 2017, it attempted to acquire Qualcomm, which also attracted the attention of the world. For this merger, the global headquarters was moved to the United States, but in the end, Trump stopped the merger in March 2018 due to “national security considerations.”
Lip-Bu Tan was the CEO of Cadence (ticker: CDNS), one of the world’s three largest semiconductor EDA suppliers in 2029. In addition, he also serves as a director of the Global Semiconductor Association (GSA), a director of the American Venture Capital Association, and an advisor to the dean of the MIT School of Engineering.
In 2023, he resigned as a director of Intel after having serious disagreements with the former Intel CEO over the future of the company. For the details of this past event, please see my post of “How bad is Intel right now?“
Unexpectedly, a year later, Kissinger was forced to resign by the board of directors, and Intel fell into a leaderless situation, and it was almost impossible to find someone qualified and suitable to succeed as CEO. On March 12, 2025, Intel appointed Lip-Bu Chen as its new CEO, hoping that his connections in the semiconductor industry, qualifications, and understanding of Intel could save the representative American semiconductor company from the biggest crisis since its founding.
Lip-Bu Tan was born in Malaysia. He holds a bachelor’s degree in science from Nanyang Technological University in Singapore, a master’s degree in nuclear engineering from MIT, and an MBA from the University of San Francisco in the United States.
Chen Liwu is known as the “Godfather of Chip Venture Capital” in the semiconductor field, in recognition of his solid academic experience and career.
After graduation, Chen Liwu served as CEO of Cadence, a major EDA (electronic design automation) manufacturer, and accumulated practical experience in the chip industry. For a period of time after that, he tried to switch to the music industry and served as the vice president of Chappell, a long-established British music publisher and piano manufacturer.
In 1987, Chen Liwu, who was only 28 years old, became famous in one battle. He founded Walden International, a world-renowned venture capital company in San Francisco, focusing on early-stage technology investments.
Lip-Wu Tan has a certain influence by investing in the AI startup industry through his venture fund Walden International. Lip-Bu Tan is known as the godfather of venture capital in the semiconductor industry. As an engineer by training, he has built a large empire with his rich technical knowledge and precise business acumen.
To date, Walden International has invested in more than 60 projects, involving billions of yuan. The venture capital company has invested in more than 100 semiconductor-related companies such as SMIC, AMEC, and GigaDevice, covering subdivided areas of the semiconductor industry such as chip design, manufacturing, packaging and testing, equipment, and downstream system applications. It has become An important promoter of the global semiconductor industry.
In addition to the chip field, Walden International’s investment portfolio also includes well-known companies in other industries such as Sina, Skyworth, DJI, and Meituan.
Lisa Su, current CEO of AMD, was born in Tainan and was elected as a member of the U.S. National Academy of Engineering in 2018. Before joining Advanced Micro Devices (ticker: AMD) in 2012, Lisa Su held positions such as technical research, vice president of R&D and CTO in Texas Instruments, IBM, Freescale (acquired by NXP) and other companies. Since 2014, Lisa Su has served as the CEO of AMD.
Huawei HiSilicon’s Ren Zhengfei
HiSilicon is a chip design company under the Huawei Group. HiSilicon mainly designs related chips for various subsidiaries of the Huawei Group. Therefore, its business scope is very large, ranging from small consumer electronics chips to communication chips, automotive chips, even the most difficult mobile phone communication modems that only five companies in the world are capable of launching, artificial intelligence chips that Nvidia regards as its main competitors, server chips, and all chips for communication base station equipment in the telecommunications industry.
Marvell Technology (ticker: MRVL) is an American chip manufacturer that specializes in manufacturing chips for storage, communications and consumer electronics products.
The company was co-founded in 1995 by Dr. Sehat Sutardja, an Indonesian Chinese, his wife Weili Dai, and his brother Zhou Xiuwu. It is headquartered in California, USA.
In June 2024, Hong Q. Hou took over as CEO and President of Semtech. Semtech(ticker: SMTC)’s main businesses include analog and mixed-signal semiconductors, advanced algorithms, high-performance semiconductors, IoT systems and connectivity services.
In January 2025, financial media revealed Semtech’s key victory in entering the AI data center network field, as Semtech CopperEdge has been introduced into Nvidia’s Blackwell platform, and Nvidia is working to launch similar fiber optic products in the second half of 2025.
MediaTek’s Ming-kai Tsai
MediaTek was established in Hsinchu Science Park in May 1997 as a subsidiary of UMC’s multimedia department. MediaTek’s initial main product was CD-ROM chipset.
Since 2000, it has invested in the research and development of wireless communication baseband and radio frequency chips, and in 2003, it has invested in the research and development of digital TV and LCD TV control chips.
In 2009, MediaTek signed a patent agreement with Qualcomm and signed a strategic cooperation memorandum with Aoshitong Technology to cooperate in the development of TD-SCDMA. In 2014, MediaTek developed and exhibited its first 4G LTE modem, MT6290.
Novatek’s Tai-Shun Ho
Novatek was established in Hsinchu Science Park in 1997. It was originally the commercial products division of UMC. Tai-Shun Ho led 120 people to establish Novatek Technology in 1997. Its main products in the early days were computer peripheral chip sets.
In 1999, Tai-Shun Ho decided to get involved in the LCD panel driver chip market. After 2000, he turned to LCD driver chips and system-level chips, which were used for keyboards and mice. The world’s largest supplier of keyboards and mice controllers.
Atheros’s Teresa Meng
In 1998, Taiwanese Teresa Meng resigned from Stanford University and founded T-Span Systems, a company focusing on wireless communication technology. In 2000, the name was changed to Atheros Communications, and the company was listed on the U.S. stock market in February 2004.
In January 2011, Qualcomm (ticker: QCOM) acquired Atheros. In 2007, Meng was elected to the U.S. National Academy of Engineering for pioneering the development of decentralized wireless network technology.
Xilinx’s Victor Peng
Victor Peng is a Taiwanese-American who joined Digital in 1982. From 1982 to 2008, he successively served as CEO of Silicon Graphics (acquired by Hewlett Packard Enterprise in 2016), MIPS Technology (ticker: MIPS), Tzero Technologies, and ATI (later acquired by AMD) ), AMD, etc., and joined Xilinix in 2008. In 2022, Xilinx returned to AMD after being acquired by AMD.
Semiconductor equipment
Lam Research’s David Lam
Lam Research (ticker: LRCX) was founded in 1980 by David K. Lam, a Chinese scientist and entrepreneur who was born in Saigon, Guangdong and grew up. It is headquartered in Fremont, California. The company’s name “Lam” means the surname of overseas Chinese in Vietnam, Lin.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
Booking.com is the only one listed as a “gatekeeper” in the travel and hotel booking market.
Company Profile
Simple bio
Booking Holdings (ticker: BKNG) is the world’s largest online travel company. It mainly provides global accommodation booking services and is one of the brands of the US listed company Booking Holdings.
It was founded in 1996 by Geert-Jan Bruinsma in the Dutch town of Enschede, and later moved to Amsterdam, the capital of the Netherlands. In 2000, it merged with Booking Online to form Booking.com.
Acquired by Priceline
In 2005, it was acquired by the US listed company Priceline Group (later renamed Booking Holdings) for US$133 million, becoming one of its six brands.
Head office in Europe
Although it was acquired by an American company, Booking.com’s operation center is still in Amsterdam, the Netherlands.
The only regulated travel platform
Booking.com is one of the very few Internet giants whose head offices are located in Europe. In 2020, the European Union has regarded Booking.com and a few other large technology giants in the United States as the same level, and must be included in the EU’s strict supervision of enterprises. Among them, Booking.com is the only one listed as a “gatekeeper” in the travel and hotel booking market.
In 2023, the EU DSA will be released. The DSA regulates online intermediaries and platforms such as marketplaces, social networks, content sharing platforms, app stores and online travel and accommodation platforms. Among the 19 super companies included in the supervision, Booking.com is the only online travel operator included.
Its main brands
The main business it provides is accommodation booking, including services for hotels, hostels, apartments, vacation rentals and other properties. The group has six well-known brands: booking.com, Priceline.com, Agoda, KAYAK, rentalcars.com and OpenTable, which provide consumers with travel with local manufacturers.
How to make money?
Operational overview
As of December 31, 2022, the company had approximately 2.7 million properties available for booking, including 400,000 hotels, motels and resorts and 2.3 million homes, apartments, in more than 220 countries and with more than 40 Services are provided in languages. It also offers flights to 54 markets and tours and activities covering more than 1,200 cities.
On November 9, 2023, Booking.com announced the launch of cruise services as a new travel vertical for U.S. customers. The new product addresses travelers’ cruise booking needs and is offered through a partnership with leading cruise agency World Travel Holdings (WTH).
Current operating model
Booking.com is a platform where travelers can find information on flights, hotels, car rentals and more. After customers find what they need, they can choose to book directly with airlines, car rental companies, etc. In these cases, Booking.com simply earns a commission. This is a very good business that draws commissions, and this is what the company sees now.
His main corporate competitive advantage comes from his unique business model to build his brand. The company uses a C2B customer reverse pricing model to allow customers to customize the price they are willing to pay when booking travel products online, and then the company decides whether to accept the plan. This business model uses the flexibility of buyers to enable sellers to sell excess tourism products at lower prices without affecting their sales channels, through a disguised inventory clearance and resource monopoly model.
Artificial intelligence push
Cash flow trends favorable
When Booking.com processes transactions on its platform, it’s called merchant revenue. When it earns commission, it is called agency income. As of 2023, merchant revenue will exceed agency revenue for the first time. However, by the first three quarters of 2023, merchant revenue will only account for 51% of total revenue, which means that it still has a lot of room to grow, allowing it to account for a larger proportion of overall revenue.
Future operating goals
However, management has a bigger picture in mind. Booking.com’s management wants users to book all aspects of travel directly on its platform — something it calls “connected travel.” To make this vision possible, the company had to build its own payments platform.
Travel agencies help people book all aspects of travel. But for a company the size of Booking.com, which relies mainly on agents (such as travel agencies) for its main revenue, this manual cost is too high. As a result, company management hopes to train its artificial intelligence to do the job of a travel agent, furthering its vision of the future of connected travel.
This is not just a vision. If Booking.com can continue to make progress on this front, shareholders should benefit.
Need to change payment model
In addition, many Booking.com users may be arranging travel in different places. If the company’s AI travel agent works, it could allow users to book many, if not all, aspects of travel on Booking.com, which would increase revenue.
As users shop for more travel arrangements in one place, increasingly powerful artificial intelligence technology can support Booking.com’s revenue–this is the company’s management vision for connected travel. The key is that this is only possible if Booking.com handles payments itself. That is, when Booking.com handles consumer payment processing itself, there is the possibility of increasing cash flow.
Why is booking.com so sure?
As of this writing, the company’s pre-order inventory is at an all-time high, but if management’s AI plans are successful, the company’s stock price could continue to reach new highs in the future.
Current progress
In the summer of 2023, Booking.com announced it would begin testing an AI-based travel planner. AI Trip Planner is based on ChatGPT technology. It is designed to help choose a direction, plan a route, or answer a specific question. Initially, the service will be available to a limited number of users in the United States.
Main competitors
Airbnb
Airbnb (ticker: ABNB) is a newly emerging online accommodation sharing website. Please see the special introduction in my previous post “Airbnb’s unique offering is competitive“.
Expedia.com
According to 2015 data, Expedia Group (ticker: EXPE) received 7 billion flight searches in a year, with an average of 40 million visitors each month. As far as travel platforms are concerned, Expedia has been the world’s largest travel retailer since 2012. Under the influence of the popularity of mobile Internet, this 20-year-old brand has been constantly pursuing technological applications.
Its brands include Expedia.com, Hotels.com, travel integrated search (Metasearch) engine company Trivago, Hotwire.com, Egencia, Venere.com, HomeAway, Expedia local experts, and Classic Vacations. Search engines Travelocity, Orbitz and others.
Tripadvisor
TripAdvisor (ticker: TRIP) has 24 travel website brands. Once owned by Expedia.com, it was spun off in December 2011 and listed separately. It has branches in 45 countries around the world, including the United States, the United Kingdom, Spain, India, China and other places, covering 28 languages. With more than 600,000 members and information on more than 1,650,000 hotels, 530,000 attractions, and 2,700,000 restaurants.
Risks
Antitrust investigation
In recent years, there have been frequent disputes between Booking.com and TripAdvisor (ticker: TRIP), including competition authorities from the United Kingdom, France, Germany, Italy, the Czech Republic, Austria, Hungary, Sweden and Switzerland, etc. Customers conducted investigations and questioned its improper behavior to achieve a leading position in the market.
Payment delayed
In 2023, Booking.com was accused of costing accommodation hosts thousands of pounds through late payments. People from Scotland, Thailand and Indonesia said they were affected. The company blamed “unforeseen technical issues.” Hosts from Japan, Hungary, Croatia, Australia, Denmark, the Netherlands, Sweden, New Zealand, England, Europe, and Hungary all had partners protesting loudly.
In July, August and September 2023, the payment scandal was heavily reported in the media in these countries, affecting Booking.com’s long-term image. The CEO of Booking.com has apologized to hosts affected by the payment scandal who were not paid in time. It said this was an error caused by the company’s internal payment system and said it would solve the problem as soon as possible.
Customer data leaked
In November 2014, it was revealed that criminals were able to obtain customer details from the website. The company said it was cracking down on fraudsters and refunding affected customers in the UK, US, France, Italy, UAE and Portugal. However, the site was again targeted by hackers in June 2018.
On April 6, 2021, the Dutch government fined the company €475,000 for failing to report a breach within the period specified in the General Data Protection Regulation. The criminals obtained the personal data of more than 4,000 customers, including the credit card information of nearly 300 people.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
Jesse. Livermore’s opinion on investment vs speculation is really to the point: speculators want possibilities, while investors want value.
Let’s dive on investment vs speculation.
Book ‘The Essential Buffett’
In book ‘The Essential Buffett‘, author Robert G. Hagstrom Jr. summarized the difference between investors and speculator from top investment gurus as below.
Keynes
Investing is the activity to forecast future reward of assets.
Speculation is activity to forecast market psychology
Graham
Investing is, based on reasonable logic, discreet analysis, secure your principle and win satisfied reward.
Satisfied reward is subjective.
Discreet analysis means diligently analysis existing info, get conclusion based on related principles and correct logical decisions.
Any activity not meet above requirements is speculation.
Buffett
Investors care about assets (including company).
Speculators focus on forecasting price changes independent on company.
Insist the difference between investing and speculation, don’t mixed up.
Knowledge helps to make the difference between investing and speculation.
The commonarity
The commonarity from these three invesment gurus, they all agree:
Speculators are more interested in guessing future price.
Investors ‘know’ future price performance is tighly coupled with asset’s economic situation.
Fred Schwed’s opinion
The most insight say
In the book of “Where Are The Customers’ Yachts?” by Fred Schwed Jr. he wrote “Speculation is an effort, probably unsuccessfully, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.”
Other comments in his book
Investors and speculators have a habit of wanting to know about the future. The demand is supplied by Wall Street — with full faith in their ability no less — which conveniently fuels transactions. The realistic answer — “I don’t know” — is also the hardest response to get (and give) to any questions about the future.
The typical speculator sees stocks as ticker symbols and pieces of paper to play games with, not businesses with factories, workers, and products. It’s the inability to see things for what they are that leads to extraordinary risktaking and ruin.
“What do you think of the mentality of a man who goes down to Wall Street with very little and wins, by speculation, thirty millions, none of which he has yet lost? My own considered opinion is that he too is pretty much a loony. In order to make his second unimportant million he had to risk his first precious million.” Like Buffett’s take on risking what have and need for what you don’t need.
There will always be a few speculators who make money year after year just like there are always a few coin flippers who luckily hit on a long streak of heads. The longer it goes on, the more they both — speculator and coin flipper — believe they have some hidden skill.
There’s a fine enough line between speculation and investing that the differences aren’t always obvious. One obvious difference is speculation attempts to get rich quick, investing attempts to get rich slow. The chance of success improves with the lengthening time horizon.
There are two major uncertainties in the market: speculation and the animal instincts of human nature, that is, people’s “involuntary impulses”. They are not determined by basic rationality and knowledge, and cannot be calculated by mathematical formulas.
“Successful investing is anticipating the anticipations of others.”
“Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic.”
It is impossible to make money by speculating
John Maynard Keynes believed that speculation was dangerous and unlikely to bring wealth. He also believes that speculation is the result of “liquidity,” or the ability to buy and sell assets easily. Keynes believed that this ability made speculation easier, which in turn led to a disconnect between prices and values.
Here are some of Keynes’s comments on investment versus speculation:
Speculation is dangerous
Keynes believed that speculation was a dangerous and unlikely path to wealth. He thought that speculators had to predict the behavior of other speculators, which was difficult.
Speculation is a result of liquidity
Keynes believed that liquidity, or the ability to easily buy and sell assets, made it easier to speculate. He thought that this could lead to businesses being treated like pieces of paper and investors guessing where prices would be.
Anticipatory trading is harmful
Keynes believed that anticipatory trading, such as selling market leaders on a falling market and buying them on a rising one, was harmful. He thought that this could lead to investors incurring heavy expenses and developing an unsettled state of mind.
Investing in equities is investing in real values
Keynes argued that investing in equities was investing in real values instead of money values.
Benjamin Graham’s opinion
Definition
In Benjamin Graham’s great stock investment book “The Intelligent Investor“, Chapter one, he wrote: “An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
Investor vs. speculator
Graham believed that investors are long-term thinkers who analyze investments carefully and look to buy assets at prices below their intrinsic value. Speculators, on the other hand, are active traders who look for short-term gains and minimal losses.
Risk
Graham believed that speculation carries the risk of permanent loss of capital and that the majority of people lose money doing it. He also cautioned against speculating when you think you are investing, or when you lack the proper knowledge and skill.
Buffet’s opinion
Quoted from Buffett: “There is nothing at all conservative, in my opinion, about speculating as to just how high a multiplier a greedy and capricious public will put on earnings.”
Buffett’s above comment just like John Bogle advocated: “Speculation passion is not sustainable, only dividends and earnings could sustain.”
Closing words
In book of ‘How to trade in stocks‘, Jesse Livermore wrote: “there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
Speculators want possibility, and investors want is value.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
SMIC after US embargo, forced to use DVU, SMIC adopted the N+2 process and was able to produce advanced AI chips for China withou EUV. The yield rate of Ascend 910C made by SMIC has increased from 20% a year ago to 40% that can make money.
SMIC after US embargo
TSMC investors and Taiwanese, all care about SMIC’s business current progress after US embargo.
After perfecting the 28nm and 14nm processes, Mong-Song Liang helped SMIC successfully develop the 7nm process in 2023, despite the US embargo and many obstacles. SMIC did not have ASML’s EUV, which most people believed was impossible.
“Nikkei” previously reported that Yoji Shimizu, president of semiconductor research company TechanaLye, said that SMIC’s strength is only three years behind TSMC. In particular, SMIC uses 7nm technology, but its overall performance is at the same level as TSMC’s 5nm performance, which means that the design capabilities of Chinese-made semiconductors have been further improved.
5nm have been successfully pilot-produced
Recently, the market has heard that Huawei and SMIC have teamed up to develop a 5nm process using multiple patterning and achieved a breakthrough. SMIC has successfully launched a 5nm process without the difficulties of ASML’s EUV.
However, SMIC stated that although it has successfully produced 5nm process wafers due to the lack of EUV restrictions, its current mass production is still plagued by high costs and low yields.
Due to the US ban, ASML is unable to sell the most advanced EUV to Chinese factories. SMIC can only rely on deep ultraviolet (DUV) equipment. The wavelength of DUV is 193~248 nanometers, which is far less than EUV’s 13.5 nanometers. In order to manufacture advanced process chips, SMIC has to repeat the exposure process, which not only increases the cost of wafer production but is also very time-consuming. It is estimated that the production cost of SMIC’s 5nm chips is 50% more expensive than TSMC’s 5nm chips.
When talking about SMIC, we must talk about the following two things:
Because the United States is afraid of China’s rise, it has joined forces with other countries to impose a technological blockade on China, including a tight embargo on advanced semiconductor manufacturing equipment and materials, causing SMIC’s advancement after the 14nm process to be greatly delayed.
In 2017, after Mong-Song Liang joined SMIC, SMIC’s 28nm process yield rate began to improve.
Because he developed 22nm too late and missed the opportunity for mass production, he decided to skip the next generation 22nm process and switch to the mass production of 14nm process strategy.
Mong-Song Liang significantly increased the 14nm process yield from 3% to over 95% within 298 days, making SMIC the sixth company in the world capable of producing 14nm chips after TSMC, UMC, Samsung, GlobalFoundries and Intel; and the fifth company in the world capable of manufacturing 12nm process.
Unable to obtain EUV, use DUV for advanced process
SMIC does not have ASML’s EUV, which most people think is impossible. In 2023, SMIC helped SMIC successfully develop a 7nm process using DUV. EUV equipment only requires 9 steps to carry out the 7nm process, but using DUV equipment requires 34 steps. In May 2024, market professionals estimated that the industry’s estimate of SMIC’s 7nm chip yield is about less than 50%.
Market sources say Huawei and SMIC have teamed up to develop a 5nm process using multi-patterning and have achieved a breakthrough. Without ASML’s EUV, SMIC should be able to launch a 5nm process by 2025 at the earliest.
Advanced process yield rate reached 40%, aim 60%
In February 2025, the Financial Times quoted two people familiar with the matter as saying that under the premise of being forced to use DVU, SMIC adopted the N+2 process and was able to produce advanced AI chips for China without extreme ultraviolet (EUV) technology. The yield rate of Ascend 910C has increased from 20% a year ago to 40% that can make money.
SMIC’s goal is to increase the yield to 60% of the same-level H100 wafers produced by TSMC for Nvidia. Based on this, Creative Strategies consulting firm said that 40% of SMIC’s yield will be commercializable───it means that this level of yield rate is not only break even but good enough to make money.
Already ranked world’s top 3 foundries
According to a survey released by TrendForce on June 12, the output value of the world’s top 10 wafer foundries in the first quarter of 2024 was US$29.2 billion, a quarterly decrease of 4.3%. The top three are as follows:
TSMC’s revenue decreased by about 4.1% quarter-on-quarter to US$18.85 billion, with a market share of 61.7%.
Samsung’s revenue fell 7.2% quarter-on-quarter to US$3.36 billion, and its market share fell to 11%.
SMIC’s revenue increased 4.3% quarter-on-quarter to US$1.75 billion, outperforming its peers, with a market share of 5.7%, surpassing GlobalFoundries and UMC to jump to third place.
It is worth mentioning that SMIC’s ranking has risen to third place, narrowing the gap with Samsung. Samsung’s market share has been between 15-17% in the past few years. This also confirms my viewpoint in my post three years ago, “Two long-term threats to TSMC: US and SMIC“
SMIC is now stronger than before the US embargo. Not only has it produced 7nm chips without EUV, but its yield rate has exceeded 40%, which is beyond everyone’s expectations and has reached the threshold of making money.
More importantly, at the beginning of 2024, SMIC has become the world’s third largest wafer foundry, and its market share has narrowed to about 5 to 6 percentage points closer to Samsung.
I emphasized in my post “”6 common wrong semiconductor investment myths” that the vast majority of the world’s chips do not require advanced processes. Especially since SMIC will be the world’s third largest wafer foundry by 2024, this price cut will have an important impact on the mature processes of the world, including UMC, World Advanced, GlobalFoundries, and even Samsung and TSMC. If Samsung and TSMC do not force customers to bundle advance and mature processes, prospects will be affected.
TrendForce said that data showed that in 2024, Taiwan’s market share in mature processes will be 44%, leading the world, but China will be close behind with 31%. By 2027, China will make significant progress and increase its market share to 39%. Taiwan’s rate will drop to around 40%, with almost no gap between the two sides. In the future, China will dominate and control the world’s mature process market.
This is why the United States and the European Union have been clamoring to start sanctioning China’s semiconductor equipment needed for mature processes since 2024 because they cannot compete with China’s mature processes. Again!
What if SMIC has EUV
Based on SMIC’s performance in the past three or four years after the US semiconductor equipment ban, if SMIC can buy EUV lithography machines, normal people will understand that TSMC’s good days are over. Talent, equipment, capital, market, degree of selling one’s liver, government support; SMIC does not have any of these, except EUV lithography machine.
Conclusion
To paraphrase Friedrich Nietzsche, “What doesn’t kill me makes me stronger.” Both SMIC and Huawei have proven that there are ways to survive the unreasonable US embargo. These two companies have shown the world and the US that they are now even stronger than before the US embargo.
Those who did not dare to say no to the United States and succumbed to the United States, including Japanese semiconductor industry, Alstom, Toshiba, HTC and Taiwan’s panel industry; without exception, all fell, and none survived.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
I spent some time reading through all the transcripts of the Q&A of Munger Daily Journal (ticker: DJCO)’s sessions at shareholder meetings during his 10 years (2014-2023) . Summarized my personal thoughts and ideas in the article you are reading now.
These days, I spent some time reading through all the transcripts of the Q&A of Munger Daily Journal (ticker: DJCO)‘s sessions at shareholder meetings during his 10 years (2014-2023) . Yes, a total of 10 years. I have summarized my personal thoughts and ideas in the article you are reading now.
Since the period from 2014 to 2023 is 10 years in total, which is a bit long, I will only list the key points, and for ease of reading, I will classify them into six categories.
Daily Journal Introduction
The Daily Journal is an American publishing and software technology company headquartered in Los Angeles, California; its primary clients are in the legal industry.
The original newspaper, the Daily Court Journal (Los Angeles), was founded in 1888. Through a series of acquisitions and organic growth, Munger built it into a group of newspapers and websites providing legal, real estate and general business information. The company publishes ten newspapers in California and Arizona. Its largest publications are the Los Angeles Daily News and the San Francisco Daily News. Among them, the Los Angeles Daily News is “the most award-winning newspaper in Los Angeles besides the Los Angeles Times.”
Journal Technologies, a wholly owned subsidiary of the Company, specializes in the creation of software for trial courts, appellate courts, and court system-related agencies (including prosecutors, public defenders, probation departments, and pretrial offices) in the United States, Canada, and Australia.
Recommended reasons for everyone to read
First of all, Munger Daily Journal’s 10 years of shareholders’ meetings (2014-2023) are a must-read collection for U.S. stock investors.
Buffett and Munger are two of the few investors that I personally highly recommend and who deserve in-depth study. Their demeanor, personality, knowledge, investment achievements, selfless sharing, and dedication to society are obvious to all. I will not go into detail here. If you are interested, you can use their names to find dozens of articles about their achievements in these areas in my blog.
Berkshire’s annual shareholder letter is written by Buffett, and Munger plays only a supporting role in Berkshire’s shareholder meetings. Munger rarely speaks and only gives a brief response when the host Buffett designates Munger to answer. However, the Daily Journal’s annual shareholder letter is written by Munger, and Munger’s Daily Journal shareholder meeting is hosted by Munger himself.
After Wesco Financial was acquired by Berkshire Hathaway, without Wesco, shareholders shifted their focus and were able to hear many of Munger’s inside stories on Berkshire Hathaway’s important decisions at the Daily Journal’s annual shareholder meeting, including how Buffett decided on investment targets, how the two discussed key issues, and other insightful views of Munger that shareholders could not have learned at Berkshire Hathaway.
Compared with Berkshire or Weisco, the scale is much smaller, but the grand scale of the Daily Journal’s shareholders’ meeting is not much worse than that of Berkshire. There is one big difference between the shareholder meetings of the two companies: Berkshire’s shareholders are more like the Woodstock of the investment world, while the number of people attending the Daily Journal’s shareholder meeting will not be that large.
In addition to the Daily Journal’s shareholders, most of the attendees who can attend the Daily Journal’s shareholder meeting in person are Charlie. Munger’s personal admirers want to hear his views on major issues or investment problems, as well as answers to important questions related to Berkshire that cannot be heard at Berkshire shareholders’ meetings.
Key points of 10 years shareholders meetings
On Investment
You must have the courage to bet on the good opportunity that you have finally waited for. This is my investment method.
One year the fund I managed fell by 40% and the market fell by 50%.
I always choose to invest in the best opportunities I can find. This has been the case in the past and will not change in the future.
Don’t be discouraged by missing good opportunities, good opportunities always exist.
Everyone has two or three good investment opportunities in his life. The key is to seize them.
I have a client, an old lady, who divided all the money left to her by her deceased husband into five parts and bought five blue chip stocks in each part. She just bought and waited, but very few people do what she did.
The secret to fishing is to fish where the fish are.
Investing in bank stocks
Buffett said: The problem with the banking industry is that there are too many banks and too few bankers.
Investment banking is risky, and sometimes we make stupid mistakes in areas where we excel.
It is easy for the banking industry to inflate profits, often sacrificing long-term interests in pursuit of short-term gains.
The meeting mentioned investment in bank stocks, and conducted an in-depth analysis using Wells Fargo and Bank of America as examples.
Bank executives face many temptations.
Corporate
Since 1990, the number of antitrust cases prosecuted by the Department of Justice has dropped from 20 to zero, resulting in the current winner-takes-all situation where the big get bigger.
Investing through a company will result in higher income tax, while investing through a partnership will result in much less tax. It is certainly better to invest in stocks through a partnership than through a company, as the difference in tax payments is huge.
Munger gave examples and detailed the five criteria for screening managers.
Cash
My cash and stock levels are 100%.
Buffett bought ExxonMobil simply to replace cash, that is, to find a better place to store the cash.
Munger’s thinking logic and philosophy
As circumstances change, ideas must change as well.
I have been busy dispelling my own prejudices.
I’m not smarter than anyone else, I just avoid doing stupid things.
It’s okay to worry and doubt; it proves that you are thinking.
There are some things we think we know, but in fact we don’t, and experience changes with civilization.
What drives the world is not greed but jealousy. Life is getting better but people’s sense of happiness is getting lower.
When you encounter a problem, develop the habit of reverse thinking, and you will be able to solve the problem rationally.
Berkshire Hathaway
The main reason for Berkshire’s success is that we rarely make mistakes.
Berkshire has made about 100 important decisions to date, an average of about two per year.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
Palantir’s reliable revenue, it has long relied on bids from the U.S. government and a handful of Western allies that are very close to the United States. Palantir’s top management certainly knew the urgency of this issue, so they began to use their own advantages to establish relationships with business partners, hoping to change the single nature of the company’s business and expand the company’s products to customers outside the government, or to Application scenarios other than military and national security.
Palantir quick profile
Introduction
Note: I suggest that before reading further, you must read my previous post: “What kind of company is Palantir?” The basic understanding of the company Palantir, and this article will not repeat the content.
Palantir’s offerings include tools used mostly by government agencies for intelligence gathering, counterterrorism and military purposes.
AI and big data leader
Palantir Technologies (ticker: PLTR) is a particularly iconic company in the technological wave of artificial intelligence in the past two years. Palantir uses artificial intelligence technology to analyze big data and help customers make decision-making analyzes on their products to meet customer needs.
Close relationship with US government
In the third quarter of 2024, revenue from government-related revenue accounted for 56.3%, and revenue from corporate customers accounted for 43.7%.
2024 Q3 result
The third quarter of 2024 summary:
Revenue in increased by 30% year-on-year to US$726 million
Net profit of US$148.2 million increasing by 106% year-on-year
Earnings per share of US$0.06.
Cumulative revenue in the first three quarters of 2024 has exceeded US$2 billion and net profit has exceeded US$400 million.
The financial report was better than market expectations. After the financial report was released, the stock price surged and hit a new high since the company went public
The company’s proud achievements
The man behind the bin Laden sniper attack
Palantir appears to be a private enterprise, but in fact it has close business relationships with intelligence agencies such as the U.S. Department of Defense and the Department of Homeland Security, because almost all of the company’s revenue from government departments is the U.S. Department of Defense. In May 2024, Palantir signed a five-year contract with the U.S. Department of Defense to help the U.S. Army design a Project Maven artificial intelligence combat system. The total contract value is as high as $480 million. The artificial intelligence combat system Palantir designed for the US Army should be a product related to military promotion.
Palantir previously helped the U.S. Department of Homeland Security build a database of global terrorists. In 2011, when the United States was hunting bin Laden, the top terrorist, it used the company’s Palantir Gotham big data analysis system to analyze Bin Laden and Al Qaeda. The behavioral pattern of organizing activities successfully helped the US military locate Bin Laden and complete the sniper plan.
Tested by real combat
On the Russian battlefield, Palantir’s artificial intelligence technology helped Ukraine hunt down Russian military bases. According to reports from Time magazine and the British military website, the artificial intelligence software provided by Palantir helps the Ukrainian military’s unmanned reconnaissance aircraft to independently identify targets such as personnel, tanks and armored vehicles, and transmit the information to Palantir. Thiel’s artificial intelligence software has greatly improved the identification capabilities of unmanned reconnaissance aircraft, from less than 50% previously to a hit rate of 80%.
Palantir’s artificial intelligence technology, combined with big data software, can effectively detect movements and artillery fire on the battlefield through data collected from manpower, intelligence, drones, radar and thermal imaging. sources and provide a variety of targeting options for battlefield commanders to consider. The functions Palantir’s artificial intelligence software plays on the battlefield can be called an artificial intelligence arsenal.
Not successful in the enterprise world
Try hard to develop enterprise customers
Palantir’s company value lies in the analysis and speculation of artificial intelligence systems. In addition to helping the military develop artificial intelligence data systems related to tactics and battlefields, it also has private commercial customers. It also helps customers with artificial intelligence system analysis and even helps customers make predictions. Give customers time to prepare in advance for major events that may occur in the future.
Enterprise customers in recent years
Airbus, Credit Suisse, JPMorgan Chase Bank and Merck Pharmaceuticals Group are all well-known large customers developed by the company in recent years.
Relying on U.S. government tenders
As mentioned earlier, in the third quarter of 2024, revenue from government-related revenue will account for 56.3%, while revenue from corporate customers will account for 43.7%.
Not favored by enterprises
With such a customer distribution, the proportion of revenue from governments and enterprises seems to be fairly even. But if you follow it for many years, investors can easily discover two facts:
The total revenue from government customers has always been much larger than that from corporate customers. Even if the source of government customers is stable, the number of government customers is limited and is far less than the number of enterprise users.
What’s even more fatal is that there are almost no long-term reliable corporate customers. This is a big crisis for listed companies, because it means that the products cannot win the trust of large customers.
Advantages and disadvantages coexist
Excellent relationship with the US government
Palantir’s relationship with senior US government officials can be described as “unparalleled.” Palantir founder Peter Thiel (see my post of “Zero to One” for details) is not only the boss of the “PayPal Mafia“, He is also one of the earliest investors in Facebook, and his venture capital company has an even more accurate vision, having bet on countless of today’s star technology companies before everyone else.
Peter Thiel’s connections in the Silicon Valley venture capital community and the U.S. government are unmatched, especially his excellent relationships with the Republican Party and right-wing American politicians. Long before anyone was optimistic about Trump, Peter Thiel was one of the major donors to Trump’s first presidential campaign, just like Musk’s role in Trump’s second presidential campaign.
In 2021, Peter Thiel introduced his apprentice, current US Vice President James David Vance, to Trump at Mar-a-Lago. No one in American business can match his connections and relationships, and this is the cornerstone of Palantir’s business empire and his most important asset – because many of his network will be in the next Hold an official or advisory position in the government.
On December 10, 2024, Trump appointed Jacob Helberg, a Silicon Valley technology company executive who has a tough stance on Beijing, as Under Secretary of State for Economic Growth, Energy, and the Environment at the U.S. State Department. One of the duties of this position is to develop and implement international policy for the United States related to science and technology. Helberg is a senior advisor to Palantir’s CEO.
Government bids are bright in the future
Palantir has almost no significant enough rivals in government bidding. Please note: the US government, especially the Department of Defense’s bidding, has very high entry barriers for suppliers. In addition to having extremely reliable political and business connections, manufacturers and employees All must pass national security-level loyalty assessments, reliability and safety reviews, and must have years of actual combat experience and results. In short, it is certain that Palantir’s future bids for the U.S. government will be bright.
Revenue from the government will increase
As global geopolitical risks become higher and higher, Palantir’s artificial intelligence technology analysis will have many applications in new weapons. Coupled with its close relationship with the US government, Palantir will not worry about new orders in the future. However, due to their close ties with the military, this type of company is shrouded in mystery. Even if its future operating prospects are bright, unless some consensus is reached with the U.S. military, it is unlikely that the company will significantly expand its scale, meaning that revenue is unlikely. , and it is not easy for a sudden explosion to occur.
Enterprise might hinder growth
Without long-term reliable corporate customers, it mainly relies on U.S. government bids for its livelihood. This means that the company’s long-term revenue growth is limited, and the company’s market value cannot become a super listed company.
Although Palantir reports a net dollar retention rate of 118% as of the third quarter of 2024; to be honest, this is a good number. However, the problem is that by relying too heavily on superficial numbers, investors may be misled. It did not break down the specific numbers for government and corporate clients, nor did it disclose the company’s customer contract renewal rates. From what I know and what the media has reported over the past few years, a number of large and famous companies have decided not to renew their contracts with Palatir.
There is a lot of room to grow on enterprise
Palantir’s U.S. commercial customer base has grown from 181 to 321 in the past year. There are thousands of such large companies in the United States alone, which is a virgin land that is waiting to be developed for Palantir.
In the past, Palantir’s performance in the field of enterprise users lagged far behind its performance in government departments, but for Palantir in the future, it seems that the management team has been making great efforts and has achieved initial results.
Organizing an alliance for defense contracts
Goal
Palantir and Anduril are in talks with dozens of competing technology companies to form alliances to jointly bid for U.S. government contracts. The goal is to overturn the situation in which a few major defense contractors monopolize government contracts and seek to divide the U.S. government’s annual defense budget of up to $850 billion from traditional major contractors such as Lockheed Martin, Raytheon and Boeing.
U.S. defense procurement has long been criticized as slow, anti-competitive and favoring a small group of established defense companies, which typically produce ships, tanks and aircraft that take years to design and build.
Favorable trends
These defense technology startups from Silicon Valley have attracted record funding since 2024, and their business leaders have actively engaged in politics, intervened in government personnel, established connections in government departments, and influenced government policies. Investors are betting that these companies will be the winners from increased federal spending on national security, immigration and space exploration after Trump takes office.
Advantages
The alliance will bring together some of Silicon Valley’s most valuable companies and leverage their innovative technology products. Silicon Valley’s defense industry prioritizes the production of smaller, lower-cost, autonomous weapons to supply the U.S. government with advanced defense and weapons. Capabilities provide a more efficient approach.
Relevant experience of alliance members
Palantir’s “AI Platform” provides cloud-based data processing, and in December 2024, it will integrate Anduril’s autonomous software “Lattice” to provide AI for national security purposes; Anduril will combine its anti-drone defense system with OpenAI’s advanced AI model. Combined, working together on U.S. government contracts related to “air threats.”
SpaceX and Palantir won large public contracts from the government 20 years ago, and some of the others in the alliance are the latest to become government contractors. OpenAI adjusted its terms of service in 2024 to no longer explicitly prohibit the use of its AI tools for military purposes.
Alliance Members
The alliance plans to be announced as early as January 2025, and companies discussed for joining include Musk’s SpaceX, OpenAI, self-driving ship manufacturer Saronic, and AI data company Scale AI.
Start to get involved in other fields
Actively want to change
Because of Palantir’s reliable revenue, it has long relied on bids from the U.S. government and a handful of Western allies that are very close to the United States. Palantir’s top management certainly knew the urgency of this issue, so they began to use their own advantages to establish relationships with business partners, hoping to change the single nature of the company’s business and expand the company’s products to customers outside the government, or to Application scenarios other than military and national security.
Cloud
In 2024 alone, Palantir has strategically cooperated with Microsoft, OpenAI, and Oracle, several heavyweight partners across the fields of cloud, artificial intelligence, and large enterprise applications, to help promote Palantir’s products. To a larger market and users.
National defense
Shield AI
Shield AI and Palantir announced a strategic alliance in December 2024 to improve the command and control capabilities of autonomous unmanned systems. The collaboration aims to provide scalable artificial intelligence solutions that can function without GPS or communications. Shield AI is furthering its goal to protect military personnel and citizens by delivering artificial intelligence-driven technology using Palantir’s Warp Speed, a manufacturing operating system designed to re-industrialize America.
Brandon Tseng, president and co-founder of Shield AI and a former Navy SEAL, emphasized the synergies between the two companies as the technology they create has been tested in difficult environments.
Anduril Industrial
Palantir and Anduril form a new alliance to ensure the U.S. government remains a world leader in artificial intelligence. The goal is to provide technology infrastructure from the edge to the enterprise to transform America’s world-leading artificial intelligence advances into next-generation military and national security capabilities.
The two sides actually have to resolve two main issues: First, data readiness, ensuring that national security data—sensitive data collected through sensors, vehicles, weapons, and robots at the tactical edge—will not be used. Used for artificial intelligence training and algorithm development.
Performance of the capital market
Market Cap
As of December 13, 2024, Palantir’s market value is US$173.21 billion, which is considered a large-cap stock in the U.S. stock market and is much higher than the market value of many well-known large technology companies you are familiar with.
Price-to-Earnings Ratio
As of December 13, 2024, Palantir’s price-to-earnings ratio was 384.87 times, a number that can only be described as crazy.
Stock price performance
As of December 13, 2024, Palantir’s stock:
Since the beginning of 2024, it has risen by 358.81%.
Since the company went public, it has only been 4 years and has risen by a total of 726.85% (please note that Palantir was listed on October 2, 2020).
It is the No. 1 stock price performance in 2024 among all the components of the S&P 500 index!
Valuation is insane
Palantir’s stock currently trades at 49 times estimated 2025 revenue and 124 times free cash flow (FCF). The current valuation level is too high even in the face of transformative technological shifts such as AI data integration. Investors are advised to remain patient and wait for a better entry point.
credit: Palantir
I am the author of the original text, the essence of this story was originally featured on Smart Magazine, Issue of Febuary 2025
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
Anyone who believes TSMC moat or competitiveness is a day dreamer. Once US takes action, investors will know whether TSMC has a wide enough corporate moat or competitiveness.
For a long time, investors in the Taiwan stock market have believed in TSMC moat. After all, it is the single listed company with the largest number of shareholders in the Taiwan stock market, and it is also the listed company with the highest market value in Taiwan.
However, many Taiwanese stock investors who hold TSMC shares start from Taiwan’s standpoint and perspective, and have their own wishful views and insistence. Burying heads in the sand like an ostrich, and acting like a frog in a well, always feeling good about itself, believing that Taiwan is invincible and that the world cannot do without TSMC.
Those who even do not allow or are unwilling to listen to the truth, or cannot tolerate different voices. They often call such negative or different views on TSMC “badmouthing (aka paint a grim picture of)”. If this is true, if a listed company can be so easily “badmouthed” by negative or different opinions, then I advise you not to buy the company’s stocks. According to this logic, should all exchanges around the world cancel short selling trading methods? Stock market regulatory authorities should list short sellers as illegal criminals and arrest and imprison them?
I want to remind investors that Taiwan is not the center of the universe, and the world does not revolve around Taiwan.
Do you think TSMC can withstand the US’s ban on SMIC and Huawei? Nothing is impossible in this world, it’s just a matter of probability. Just like the stock market, anything can happen tomorrow.
Forced to set up factories in US
TSMC (ticker: TSM) is forced to set up a wafer fab in the United States. No one with some industrial knowledge would think that TSMC’s US wafer fab can make money. Please refer to my other two posts “TSMC gets emerging and serious challenges” and “Why is TSMC’s profit margin much greater than competitors?” for a detailed explanation. TSMC already has a wafer fab in the United States, but it has been unable to make money for a long time. If it could make money, TSMC would have gone long ago, and it would still need to be forced.
At first, there was one factory, then two, and recently TSMC confirmed that there will be a third one. It will not be too surprising if there are more factories in the future. For details on how many wafer fabs and packaging and testing plants TSMC has around the world, please see the detailed list in my post of “How many fabs and houses does TSMC have currently and in the future?“
The matter doesn’t stop there. After the wafers are produced, they still have to be shipped back to Taiwan for packaging. Americans are still worried. In August 2023, Taiwanese media reported that the governor of Arizona came to Taiwan in person to put pressure on TSMC, requiring TSMC to build a new semiconductor packaging plant in Arizona. Compared with wafer production, semiconductor packaging is an industry that relies more on manpower. There is no money to be made in wafer production. The packaging factory is located in the United States, which is a bottomless pit for burning money.
TSMC is becoming ASMC and hollowing out Taiwan
On March 3, 2025, at the White House, TSMC chaiman C.C. Wei said that TSMC has invested $65 billion in Arizona and will invest an additional $100 billion in the future, bringing TSMC’s total investment in the United States to $165 billion. In addition to the three semiconductor manufacturing plants in the original investment plan, TSMC promised to build “additional” three semiconductor manufacturing plants, as well as two packaging plants and one “R&D center”, this the largest single foreign direct investment case in U.S. history.
Please note: This is the first time that TSMC has established a research and development center outside of Taiwan, which has caused great doubts in Taiwan, confirming that the Taiwanese people have long believed that the United States is swallowing up TSMC, and the government is gradually succumbing to the United States and turning TSMC into “ASMC”. Moreover, Trump has emphasized at the White House press conference: The United States only wants TSMC’s high-end process.
TSMC is not a central bank that can print its own money. The capital expenditure of an enterprise has a limit. Even though TSMC is making a fortune now, it has invested $100 billion in four years, which is equivalent to $25 billion a year. TSMC Chief Financial Officer and spokesman Huang Renzhao said that capital expenditure in 2025 is estimated to be between US$38 billion and US$42 billion, with a median of US$40 billion. Minus 25 billion from 40 billion, only 15 billion is left. Do you believe that this will not affect TSMC’s previously announced plans, most importantly the many factories and investment projects originally located in Taiwan?
For a long time, there have been voices and Taiwanese criticize within Taiwan that TSMC is expanding its investment in the United States will lead to “TSMC become ASMC and hollow out Taiwan”. TSMC had previously promised that the most advanced semiconductor process would remain in Taiwan, but as the United States advances step by step, the Taiwanese government is unable to protect it. Everyone is watching to see whether TSMC can keep its previous promise.
Seeing the overwhelming voices of Taiwanese people and media questioning whether the total investment of US$165 billion will turn TSMC into “US TSMC”. C. C. Wei and the president were forced to hold a press conference on March 6, 2025 to explain to the public, but the actual effectiveness and whether it can resolve the doubts of the whole people remains to be tested in the future.
Taiwan’s Central Bank revealed that foreign exchange reserves amounted to US$573.299 billion at the end of June 2024, making Taiwan the sixth largest country in the world in terms of foreign exchange reserves. TSMC has pledged a total of US$165 billion in investments in the United States, accounting for 28.78% of Taiwan’s total foreign exchange reserves. US$573.299 billion is the common asset of all Taiwanese people accumulated over the past 70 years. How can it be squandered at will?
165 billion US dollars is a very scary and huge number. Please note that foreign exchange is an important indicator to measure a country’s national strength. Foreign exchange reserves directly affect a country’s income and expenditure division, exchange rate, trade, financial stability, and even credit rating. Its importance is beyond the imagination of ordinary people.
As Trump said, the amount of TSMC’s investment in the United States is the largest amount of investment by a single company in the history of the United States.
This is not the first time that Trump has helped TSMC to “increase” its investment plan in the United States. Before returning to Washington, D.C. from Mar-a-Lago in Florida, Trump said in a joint interview with reporters on Air Force One that TSMC’s investment in the United States has reached US$200 billion, and TSMC’s investment plan is expected to bring the U.S. market share in the chip market to 35% or even 40%!
Impact Taiwan’s economy
TSMC has invested $100 billion in the United States. Assuming that it increases its investment in the United States by $25 billion per year and reduces its investment in Taiwan by $25 billion per year, it will reduce domestic private investment by about 15%. In terms of employment, TSMC has added 60,000 employees in the past 20 years and employed about 6,000 people last year. If it moves to the United States, it will affect domestic employment.
In terms of housing prices, TSMC’s dividend amount in 2024 is approximately NT$140.6 billion, with each employee receiving an average of NT$2 million. Assuming that NT$2 million is used to buy a house, the transfer will affect subsequent housing prices. Over the past five years, housing prices in Tainan and Kaohsiung have increased by 56% and 53%, respectively, which is higher than the Taiwan average increase of 49%, as well as the 29% and 38% increases in Taipei and New Taipei, respectively.
There is no guarantee whether it will happen after 2027.
TSMC’s first factory in the United States has already started mass production last year (what CEO C. C. Wei said at the White House on March 3, 2025), using 4 nanometers; the second factory in the United States will not start mass production until 2028.
What’s more, if he breaks his promise, he may no longer be the Minister of Economy by then. Who will be held accountable then?
The most advanced manufacturing process may be improved at any time. After 2027, the most advanced process may become 1.2 nanometers or even 1 nanometer. So if 1.2 nanometers or even 1 nanometer is the most advanced process technology at that time, would it be considered a breach of promise if we go to the United States? who should be held responsible?
Investors should be reminded that politicians love playing word games. There are too many examples to list, so just listen but never trust to them. And don’t forget what Trump said at the White House on March 3, 2025: American factories only need the most advanced processes. Who do you think makes the decision?
And don’t forget, on November 7, 2024, the Minister of Economic Affairs, Kuo Chih-hui, himself said: “2nm will still need to be reviewed by the Investment Review Department before it can be exported overseas, but he also admitted that the advanced process will be passed sooner or later.”
In practice, the Investment Review Commission of the Ministry of Economic Affairs can only manage mainland China, which means that there is an N-1 (one generation behind the latest process) regulation for integrated circuit investment in mainland China, but the United States does not have this restriction. The Investment Review Commission can only conduct “written review”, that is, paper work. In practice, it is unable to control the outflow of the most advanced processes. The Ministry of Economic Affairs’ statement is simply “empty talk.” Former Minister of Economic Affairs Yin Qiming also criticized that the Investment Review Commission is just a rubber stamp. Now the government is giving TSMC as a gift, so naturally it can’t play any role.
Because semiconductor manufacturing is currently the only important industry in the world that Taiwan can be proud of, a global leader, and one that holds an actual market monopoly. If TSMC also adopts the most advanced semiconductor process in its six factories in the United States in the future, Taiwan’s only industry to be proud of will become history forever.
According to an interview with Taiwan’s representative to the United States, Yu Dayu, by the Wall Street Journal, which was broadcast on the 18th: Yu Dayu’s words were clearly different from those of the Taiwan government. He said: It is not ruled out that the most advanced chips will be produced in the United States.
Silicon Shield is a propaganda
Many Taiwanese are worried that Taiwan has long been brainwashed by politicians and manipulated with the self-created term “democracy chip” without realizing it, and the self-proclaimed Silicon Shield bargaining chips will gradually be weakened. People in the semiconductor industry are worried that the “Budapest Security Memorandum” signed by Ukraine in 1994 may be repeated.
But the US’s wishful thinking is actually more practical: Even if China occupies Taiwan, the US will not have to worry about the supply of chips affecting itself, because there are already six TSMC’s most advanced chip fabs in the US. Whether it is willing or necessary to send troops, fight for Taiwan, risk going to war with China, the answer is self-explained.
Note: TSMC’s current campus in Arizona has been previously announced by TSMC to accommodate ten wafer fabs in the future without any problems. What Taiwanese investors don’t know is that, except for a few prosperous places, the cost of land in the United States is very low, and there is no shortage of land.
Second Trump administration intensify the pressure
After Trump took office for his second term, he repeatedly and publicly declared that Taiwan had taken away the US chip manufacturing industry, and threatened to impose high tariffs on Taiwan’s chip exports to the United States in order to improve Taiwan’s current monopoly on chip manufacturing.
Investors should be reminded that although TSMC is nominally registered in Taiwan, pays taxes, most of its factories are in Taiwan, and its engineers are all Taiwanese; however, for a long time, foreign investment in TSMC has exceeded 70%, most of which is American capital. It can be said that Americans have actually controlled TSMC for a long time. TSMC is a listed company. Do you think that if these American investors who hold TSMC shares launch a vote, will they stand on the side of Taiwan or the United States?
Morris Chang himself has repeatedly told foreign media that he is an American citizen (see “TSMC Morris Chang’s controversial words and deeds” for details). How many Americans do you think are in TSMC’s senior management? When Americans become naturalized citizens, they must swear an oath of allegiance to the United States. Smart readers know who these TSMC senior executives with American citizenship will be loyal to when the critical moment comes.
Please note that it is the United States, not Taiwan Mark Liu want to improve the advanced technology R&D and manufacturing competitiveness. Think about why TSMC sued Liang Mengsong back then (see “Mong-Song Liang, the hero of SMIC’s breakthrough in US blockade“)? What about Mark Liu? However, he just resigned last year. Mark Liu’s position was chairman, and he knew far more TSMC secrets than Mong-Song Liang. What we call it is the two sets of standards? This is a real example.
TSMC ultimately had no choice but to surrender to the US because it had no bargaining chips at all: its technology was completely controlled by the US, and shareholder voting rights were in the hands of Americans. The Taiwanese government had no ability to help TSMC at all. If the United States takes action like it did to SMIC or the Japanese semiconductor industry in the 1980s, TSMC’s stock price will collapse the next day and all market shares will be reshuffled.
Moreover, by the second quarter of 2025, Japan’s Rapitus, which is supported by the United States, will be able to produce 2-nanometer chips. For details, please see my post of “Rapidus will be TSMC’s strongest rival in the future” What will happen if TSMC doesn’t obey? Need I say more?
Relying on the Taiwan government is get blood out of a stone
In the past decade, the Taiwan government has been very ambiguous about the US’s push hard steadily approach to TSMC. Not only did it succumb to the US’s request to set up factories in the US.
Investors think I am talking nonsense or worrying too much, but what about the CEO of AUO and senior executives of Chimei Incorporated who were found to have monopolized by a U.S. court, and AUO Vice Chairman Chen Xuanbin was jailed for 2,343 days and Chimei Incorporated CEO He Zhaoyang was jailed for fourteen months? It was only 14 years ago. Have you all forgotten what I mentioned in my post of “The evil US, How did Japan, Alstom, Toshiba, HTC and Taiwan’s panel industry collapse ?“
China can mobilize the whole country to successfully save Meng Wanzhou from being detained. Huawei spent four years building a completely local de-Americanize semiconductor supply chain in China to prove to the United States that it could produce 7-nanometer and 5-nanometer chips on its own without TSMC under US supervision, despite the comprehensive embargo imposed by the United States and its allies. Striking back and returning again to beat Apple and making the world’s first smartphone with satellite communication capabilities. Can Taiwan do this? Do Taiwanese have such ambition? Do Taiwanese dare to do this?
The case of Japan’s semiconductor industry
In the 1980s, Japan’s semiconductor industry beat the United States so hard that the United States forced Japan to sign the humiliating and unequal agreement “US-Japan Semiconductor Agreement”, which made Japan’s semiconductor manufacturing industry go from being the world’s number one to having almost no visibility and voice today. But from another perspective, it was precisely because the United States wanted to suppress Japan’s semiconductor industry in the 1980s that TSMC was given the opportunity to take advantage.
Note: Both TSMC and Samsung Semiconductor were established the year after the signing of the US-Japan Semiconductor Agreement. This is not a coincodance.
Before Trump imposed a comprehensive ban on Huawei’s smartphones and instigated Canada to detain Huawei’s CFO Meng Wanzhou, Huawei’s smartphones were the runner-up in global smartphone sales and TSMC’s second largest single customer after Apple. At the end of 2019, Huawei accounted for about 13% to 15% of TSMC’s revenue, while Apple accounted for about 20% at the time. However, after being banned by the United States and its inventory of mobile phone processors was exhausted, Huawei’s market share in Western Europe shrank sharply from 20% in the same period of 2019 to 8.8% in the third quarter of 2020.
Note: According to reports from market research firms Strategy Analytics, Counterpoint Research and Canalys, Huawei’s smartphone shipments in 2019 exceeded Apple’s, making Huawei the world’s second largest mobile phone supplier. Data shows that Huawei’s smartphone shipments in 2019 were about 240 million units, Apple’s shipments were slightly less than 200 million units, and Samsung retained first place with 300 million units.
With the help of SMIC’s self-made 7nm chip process, Huawei has spent nearly four years building a fully localized semiconductor supply chain with zero US presence. In the first week of October 2023, Huawei phones surpassed Apple for the first time in China to become the market leader after being banned. In October 2024, after 46 months, Huawei’s mobile phone sales in China once again surpassed Apple.
Note: According to a report released by Counterpoint Research, the global high-end smartphone market with a wholesale price of more than US$600 will increase by 6% year-on-year in 2023, setting a new record. Among them, Apple took the lead with a market share of over 70%, Samsung ranked second with 17%, and Huawei returned to third with a global market share of 5%.
For more details about Huawei, a very important company, please see my other post, and you will understand why the United States hates it so much and is eager to get rid of it as soon as possible: “How does the all-powerful Huawei make money?“
SMIC case
Please read “How is SMIC after US embargo?” You will know that after being completely embargoed by the United States, they still survived and are living well. The current situation of SMIC.
In short, SMIC continues to fight back and has proven that it can produce 7nm without EUV, with a yield rate of 40% that can make a profit and is heading towards 60%.
Not only that, SMIC has previously disclosed that the 5nm process has already been successfully pilot-produced.
Stock price performance recently
Recently, I saw a certain financial media in Taiwan summarize the performance of the US stock market yesterday. The headline was roughly that the US stock market closed higher yesterday because TSMC led the Philadelphia Semiconductor Index. However, TSMC only rose 0.89% that day, while most of the well-known companies that are components of the Philadelphia Semiconductor Index rose by more than 2%, and almost every one of them rose far more than TSMC. It is ok that this kind of product placement technique or propaganda is habitually used in Taiwan, but it is really shaking to use it to such an extent that it deviates from the facts. I wonder where is the fairness and objectivity of the media?
The past three days have been national holidays in Taiwan, while U.S. stocks are experiencing their biggest turmoil since President Trump took office. On February 27, 2025, TSMC’s US ADR fell 7%. From the highest point on January 22, 2025 to February 28, 2025, TSMC’s US ADR has collapsed by more than 20% in five weeks.
Share price cannot tell lie.
Closing words
A man swealth is his own ruin by causing other’s greed. For TSMC , it maybe.
Anyone who believes that TSMC has a strong corporate moat or competitiveness is a day dreamer. Once the United States takes action, investors will know whether TSMC has a wide enough corporate moat or competitiveness.
Supporting factors? Aren’t Japan’s semiconductor industry and Huawei enough?
In my first book, “The Rules of Super Growth Stocks Investing“, I emphasized that government regulation or governance have an extremely important impact on companies. They can cause an industry to disappear in an instant and can also cause a company to go bankrupt immediately.
Geopolitics and the competition between China and the United States, to put it bluntly, are the government regulations and governance that are happening now. Huawei has experienced a catastrophic disaster that almost wiped it out, but it survived.
Especially the Taiwanese. What the United States is eyeing now is Taiwan’s only valuable and competitive industry that the entire Taiwanese have invested countless resources in over several generations and are worthy of pride. People have already violated Taiwan’s national sovereignty and have already bitten off everything, yet they are still dreaming and trying to cover up their inaction.
There are still countless Taiwanese people, including the Taiwanese government and politicians who always say “I love Taiwan”, who always have two sets of standards. They automatically kneel down when they meet the United States and Japan. They do not know how to cherish TSMC, which was created by the hard work of the previous generation. They have no ability or negotiation strategy, and they have gradually given it to the United States and Japan bit by bit, treating the people as fools. They are still using the policy of keeping the people ignorant from half a century ago, and are still making up excuses for the United States to whitewash the Americans’ desire to annex TSMC.
As for TSMC’s future? No need to argue here; let’s wait and see.
The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
