Baker says Taiwan Semi reached the node before Intel in 2018, creating a competitive shift.
“Taiwan Semi got to the node before Intel, which meant that Taiwan Semi, who supplies most semiconductor companies that you can think of Yeah.”
Baker quantifies Intel's manufacturing lead as 15-20% advantage that Taiwan Semi overtook in 2018.
“And in 2018, and it's important that the Taiwan Semi seven nanometer node is equivalent to the Intel 10 nanometer node.”
Baker explains Intel's historical advantage of reaching semiconductor nodes first gave them 15-20% embedded advantage.
“Intel for the last, I don't know, fifty years, sixty years always got to the next node in semiconductor manufacturing first.”
Baker identifies extreme consolidation in semiconductors with only three companies making leading edge logic.
“Today, Intel, Samsung, Taiwan, Semi, they the only companies in the world that can make leading edge logic. There's only three companies that can make leading edge DRAM, maybe four for NAND.”
Baker argues semiconductor industry has consolidated into monopolies or duopolies in every subsector over fifteen years.
“Let's step back and look at the last fifteen years of semis. The industry has completely consolidated to where you almost have these monopolies and almost monopolies or duopolies.”
Baker notes Taiwan Semi will spend more on CapEx in two years than in the preceding five years.
“Taiwan Semi, their 2022 CapEx is going to be many multiples of 2019. 2021 and 2022, they'll spend more than they did in the preceding five years. So there is a massive supply response coming.”
Baker says Taiwan Semi will spend more on CapEx in 2021-2022 than in the preceding five years.
“Taiwan Semi, their 2022 CapEx is going to be many multiples of 2019. 2021 and 2022, they'll spend more than they did in the preceding five years.”
Baker describes semiconductor industry as consolidated into monopolies, duopolies, or three-player oligopolies in every subsector.
“In every subsector of semis, you either have a monopoly, duopoly, or in the worst case, an oligopoly of three.”
Baker cites research showing AI algorithm quality doubles with every 10x increase in training data.
“Microsoft wrote about this in a research paper ten years ago, or maybe not twelve years ago, the quality of a given AI algorithm doubles with every 10x increase in the amount of data you use to train that algorithm.”
Baker identifies Intel, Samsung, and Taiwan Semi as the only companies capable of making leading edge logic chips.
“Today, Intel, Samsung, Taiwan, Semi, they the only companies in the world that can make leading edge logic.”
Baker says there hasn't been a true semiconductor capacity cycle since the late nineties due to TSMC smoothing supply.
“We haven't seen a true capacity cycle in semis arguably since the late nineties. And that's because Taiwan Semi has been so good at aggregating and smoothing supply.”
Baker warns VCs that Jensen sees Taiwan Semi processes before any startup claiming special access.
“If you're a VC and you're investing a semiconductor company that is telling you they are going to have an advantage because of a Taiwan Semi process that they have special access to, I promise you the Jensen saw that process when it was a twinkle in Taiwanese eyes.”
Baker reveals SpaceX and Tesla are building world's largest fab in America with Intel partnership access.
“It's a SpaceX, I believe Tesla's involved as well, joint venture to build the world's largest fab here in America. I think they're going to be successful.”
Baker explains TSMC caught Intel because semiconductor equipment suppliers wanted to avoid Intel's monopsony power.
“They wanted them to catch up. They don't like having a monopsony. The a teams were in Taiwan working. Intel made some mistakes and presto.”
Baker says Jensen Huang was obviously exceptional when they first met in early 2000s.
“I was a pretty young man. It was obvious to me he was exceptional, like for sure one of the most exceptional people I'd ever met.”
Baker explains semiconductor manufacturing advantage comes from recipe not ingredients, despite using same equipment.
“And semi's and semiconductor manufacturing, you have a big advantage if you were ahead. Everybody it's like baking. Everybody uses the same ingredients or whatever.”
Baker argues silicon will eat the world because AI is far more computationally intensive than deterministic software.
“And the nature of AI just as AI eats the world, silicon is going to eat the world because it's so much more computationally intensive than deterministic software written by humans.”
“I published a note, I think in, February 2000 after six weeks of looking at these stocks.”
Baker cites market data showing AI chip stocks lost over one trillion dollars in July 2026 with semiconductor index down over twenty percent.
“ Note: Independent market data corroborates this framing. CNBC reported that AI chip stocks shed more than $1 trillion in the July 2026 selloff, with the Philadelphia Semiconductor Index (SOX) losing more than 20% from its June peak after a roughly 130% rally over the prior twelve months. Separately, Yahoo Finance reported that NVIDIA's valuation hit a multiyear low, with its forward P/E falling to levels last seen in 2019, even as the company continued to post record revenue. The market's verdict could not be clearer. ”