1) TXN and TSM had strikingly different outlooks. TXN guided down significantly for Q4 while TSM guided Q4 up and dramatically increased capex spending for both Q4 and 2020 which shows they expect the strength to continue.
2) TXN is leveraged to global GDP. TSM is leveraged to iPhone builds, GPU strength as cloud comes back, 5G and CPU share shifts – all of which are made at TSM’s leading edge node.
3) Manufacturing leadership shifted to TSM in 2018 for the first time *ever.* This was a really important event for all of technology with implications that will echo for many years. If a history is any guide, TSM should be in a leadership position for a long time.
4) Leading edge geometries are the closest thing to magic in the world today and are as much art as science. A new node is akin to a recipe that has to be refined through trial and error.
5) Therefore being first to one node thereby increases the likelihood of being first to the next as more time to experiment and refine the recipe.
6) This is why manufacturing leadership has only changed once in the last 60 years (in 2018) and should be stable for quite some time going forward.
7) TSM's relative strength vs. TXN is connected to this as their customers are gaining share based partially upon having manufacturing leadership for the first time ever.
