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 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 believes NVIDIA could sell $11.5 trillion worth of chips next year if TSMC expanded capacity sufficiently.
“And if they doubled or tripled capacity, like, NVIDIA could probably sell $11,520,000,000,000 worth of chips next year. I really believe that.”
Baker says Jensen Huang visits Taiwan Semi quarterly wanting capacity doubled or tripled but they only expand 5%.
“And so they're just simply not expanding capacity as fast as Jensen wants. Jensen goes there every three months and, you know, maybe they expand, you know, 5%. He wants them to double or triple.”
Baker believes NVIDIA could sell $1.5-2 trillion in chips if TSMC expanded capacity, but constraints prevent bubble.
“NVIDIA could probably sell $11,520,000,000,000 worth of chips next year. I really believe that. But the other side of that might be very painful for everyone.”
Baker reveals Jensen Huang has never had a contract with TSMC, operating entirely on handshakes and fairness.
“I do think it's wild that Jensen has never had a contract with Taiwan Semi. They do business on what seems fair in handshakes.”
Baker argues NVIDIA could sell $2-3 trillion in GPUs if TSMC expanded capacity, but TSMC's restraint prevents a bubble.
“If Taiwan Semi did what Jensen wanted, I think Nvidia could sell $2,000,000,000,000 of GPUs in '26 or '27, maybe 2,500,000,000,000, maybe 3,000,000,000,000. But there is a limit where consumers would consume so much.”
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 argues TSMC remains a bottleneck even if orbital data centers solve power shortages.
“But even if we solve the shortage of Watts with orbital data centers, the TSM is still a bottleneck. And semi's and semiconductor manufacturing, you have a big advantage if you were ahead.”
Baker reveals TSMC executives dismissed Sam Altman as a podcast pro when they met with him.
“But they're just not going to and the TSM executives are the people who met with Sam Altman, and they dismissed him as a podcast pro.”