"Intel and Samsung aside, TSMC is the only (non-fabless) chip firm that really understands this business ... all the other IDMs and fab-lite proponents are looking for band aids and instant quick fixes", adds Penn, "the fact is, as this next up-turn will show, capacity equals sales; no capacity equals no sales. It really is that simple and it is a perfect correlation."
"No capacity also equals IC (wafer) price increases (supply and demand). It is one thing to have to pay a higher price for your wafers - that can be passed on; it is another matter entirely not to get the wafers at all ... that will be the kiss of death for many fabless (fab-lite?) firms."
Penn rekons that: "2010 will thus herald the long overdue unmasking of the Emperor's new clothes 'fab-lite' business strategy."
"Fab-lite, like cheap debt, is just another beancounter/ Wall Street scam ... seemingly a balance sheet lifesaver, in practice too good to be true", concludes Penn, "unfortunately Wall Street does not care, they will simply move on to their next sleight of hand. The real losers are the employees, customers and institutional investors."
Very interesting post.
The shortage of manufacturing capacity in the semiconductor industry is a serious issue.
Absolutely spot on, the long term rewards will deservedly go to those who have invested in the technology irrespective of short term financial objectives.