Patel says TSMC still uses DUV for seven nanometer despite having fifty EUV tools because DUV proved superior.
“So TSMC, to this day, even though they've been use they have over 50 EUV tools and they make hundreds of thousands of wafers a month with EUV, still uses DUV for their seven nanometer.”
Patel estimates SMIC's seven nanometer yield at 60-70% based on tool orders and Huawei's phone shipment volumes.
“And the third was looking at the volumes and such, right? So how many tools have they ordered?”
Patel argues $52 billion Chips Act is insufficient to restore US to even 20% of global semiconductor production.
“S. To even 20% of global production, let alone a higher number, which is what we'd like, going back to maybe the 80s levels, right?”
Patel says GPUs in a 16,000 GPU cluster show up to 10% speed variation from manufacturing differences.
“But even within a cluster of like 16 k GPUs, GPUs will be slower by up to 10%. Right? So there there's a lot of variation even in the manufacturing.”
Patel describes Chinese manufacturers as locked in constant cost reduction cycle rather than margin expansion.
“there's this constant pressure cooker of continual cost reductions and engineering. It's not like, Oh, well, we make 80% margins. Our cost is low.”
Patel explains Chinese companies use cost-plus pricing instead of price-to-value, avoiding margin expansion despite market dominance.
“Whereas Chinese companies are almost all cost plus. They're not price to value. They're cost plus. Right?”
Patel explains Chinese manufacturers use cost-plus pricing rather than value-based pricing across industries.
“They're not price to value. They're cost plus. Right? And so you've got this interesting phenomenon where, there are industries in China where the entire world relies on it.”
Patel asserts America cannot manufacture robots and Germany/Japan are losing capabilities to China.
“Germany and and Japan are losing a lot of their capabilities to do so slash the cost of their robots are just way, way, way higher than what China can do.”
Patel states that Japan, USA, Korea, and Germany combined deploy only a third of China's robots in 2023.
“You fast forward to 2023, and all four of these countries combined, right, are still a third of China's robot deployments.”
Patel notes many Chinese companies dominating global markets have flat or declining stock prices.
“there's so many companies on the Hangshan, the Hangshan, which is a stock market in China, right, whose stock has literally been flat or down despite the fact that they own the global market.”
Patel contrasts Western price-to-value strategy with Chinese cost-plus pricing model in manufacturing.
“Whereas Chinese companies are almost all cost plus. They're not price to value. They're cost plus. Right? And so you've got this interesting phenomenon where,”