Hence the mention of "individual". Blackrock, Vanguard etc. don't own the shares themselves, but rather manage mutual funds/index funds/ETFs that millions of people participate in.
Otherwise these few companies are the largest holders of basically every security in existence.
A company can own lots of things (assets, IP, real estate, share of other companies), but shareholders of the company don't own or have direct access to that thing. If Intel pays dividends, it will go to Nvidia, not you. If Intel holds a shareholder vote, Nvidia leadership will be the one voting, and they don't have to listen to your opinion. They can also change or sell the holding without your permission.
If you own shares of Intel through a Vanguard fund, you do have actual ownership of Intel. You can cast a vote same as every other shareholder. The dividend they issue will be passed on to you. Vanguard is simply acting as a proxy.
Don’t disagree. I think the point I’m trying to make is that the idea of “individual investor” captures a range of attributes, but some of which are also shared by non-individuals or are not shared with “individual humans”.
So I generally think wha is more useful is saying in what particular ways “individual investor” is meant when it is used in debate, decision-making, etc.
I don’t think this isn’t true. If you buy VOO, you’re buying shares in a fund that owns shares of S&P 500 companies. The managers of that fund are free to exercise their voting rights however they please. The reason why Vanguard shouldn’t be considered an individual investor is because Vanguard has chosen to delegate its votes to the fund owners. This is just a choice, they could easily choose differently in the future.
The fund manager casts those votes. They publish how they vote under a "Proxy Voting Guidelines" document. At least I've seen such documents from Fidelity and Vanguard
BlackRock Investment Stewardship (BIS) team votes even in the name of ETF holders who don't specify their preferences. There are plenty of controversies after reviews of their voting like "voted against a record 91% of all shareholder proposals — and against 93% of those focused on environmental and social issues" (2023). That's from the 2nd result in a simple web search.
Why is that controversial? Is it expected that the majority of shareholder proposals would be things that you would be criticized for not voting for? It's a bit like saying that someone voted against 91% of bills in congress. That could be good if they were bad bills!
How long until NVIDIA realises that they have a larger budget for military protection of Taiwan than the US Government and takes matters into their own hands?
Their revenues last quarter were $57B and by all accounts that’s still increasing! If they hire asian locals to cut costs, then they’re within spitting distance of US Military spending, adjusted for purchasing power.
Keep in mind they won’t need to pay for nuclear weapons maintenance, veterans, etc… so there’s hundreds of billions in savings right there.
They could also just issue more shares and raise a trillion or two through the capital markets.
I'm willing to be convinced different, but I think it would be better if companies had to be owned by a person or people ie that companies can't own companies.
It seems a layer of indirection that is more harmful than useful.
As somebody who really appreciates being able to own a ton of different companies in small amounts in my retirement account, I'm not sure if this is the right way to solve the problem.
Requiring full disclosure of all ownership stakes, traceable back to individuals, is probably a better route for this.
And it seems that there's a trend towards that, last company I registered had a new process for listing beneficial ownership of all significant amounts. Just need to push that legislation further.
You can do this but you should also relinquish all voting rights of said companies. When companies like Blackrock, State Street, Fidelity, Vanguard, etc all sit on the same boards, you're going to get decisions being forced that may not be good for the company, workers, customers, or country. Doubly so when they're sitting on two competing companies boards.
You can allow mutual funds or ETFs or whatever similar instrument, but they should not be allowed to have a vote or say in the company.
You could either make an exception for funds, or simply make them owned directly. Probably impossible before computerisation but fairly straightforward now.
The difficult problem is how you distinguish a fund for consumers versus the types of funds you want to disallow. Start trying to codify that in law and it will quickly bring people finding the edges for their own purposes.
Full public disclosure of all beneficial ownership in entities would go a lot further, IMHO.
If I am running a business in the US and I want to set up shop in Canada or France, I have to register a second business in that country and have my US headquarters own it. What I want is for ownership of the foreign subsidiary to directly mirror the primary company's, and the most efficient way to do it is to just have the US company own the foreign one.
If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company. That means they can sell their shares of the foreign subsidiary independently of the headquarters, and the two companies' ownership will diverge over time. I am effectively forced to IPO the foreign subsidiary at the moment of their creation.
You can't assign ownership to the current CEO or board members, because that creates a conflict of interest. They'd be able to take a US company they manage and turn it into a foreign subsidiary they own.
This would also make joint ventures, mergers, and acquisitions far more difficult and complicated, if not impossible.
banning corporate ownership of other companies would dramatically decrease the value of companies that people own. it would be much more difficult to sell your company. you might have built a successful company over the course of your life, and your children don't want to run it. Other companies in the same business but perhaps not in the same regious are good candidates to buy it. There are far fewer individuals with the assets to purchase a successful company.
should other companies wish to buy your company, they could still buy all the assets of your company, but not the company itself.
It's inefficient in the case of a wholly-owned subsidiary to require company A's shareholders to hire lawyers, setup bank accounts, books, etc. for a separate company B which ultimately provides the same limited liability vis-a-vis third parties. Joint-ventures become tricky between corporations. Corporations can't hold potentially toxic assets. There are quite a few good ones. Interesting nonetheless.
Also as with all corporate law questions, <other jurisdiction> allows it, so we'll just go there instead.
I'm not sure I understand your first point. If a company can't own another company there's no such thing as a "wholly-owned subsidiary". If you buy a company they become the same company.
Also super unlikely, and only worth discussing except as a theoretical exercise. We just aren't undoing centuries of law. Same reason trusts are here to stay.
> We limit liability for risky ventures for a reason.
Because the investor class had the political powers to get that protection written into law for themselves, so as to externalize risks while privatizing rewards.
The alternative has been the government controlling which ventures are funded, at which point the government assumes the risk.
Would you rather the only entity with a monopoly on violence be liable for all risky ventures? What happens when the government has a very different ideology and goals than what you support?
Again, there is a reason the status quo of private capital doing risky business with limited liability tends to work better.
The government interferes here for good reason, as no one would start a business if they would be personally responsible for random things. The LL in LLC is Limited Liability. Most governments want to make it easy to start a business.
This is the status quo because it has been consistently better than the government doing everything and being liable for everything. With private companies, you have various branches of the government with some ability to correct or regulate matters when a private entity is liable or responsible for something.
In the alternative scenario, when something goes wrong and the government is liable, good luck getting the government to find itself liable.
> The government interferes here for good reason, as no one would start a business if they would be personally responsible for random things.
People started businesses for a very long time before limited liability existed. Heck, people continue to start businesses as general partnerships and sole proprietorships to this day, despite the fact that those forms do not feature limited liabiity, centuries after limited liability was first applied to some business forms. So, “no one would start a business if they would be personally responsible” is very clearly false.
> The alternative has been the government controlling which ventures are funded, at which point the government assumes the risk.
No, that's not even remotely true; private investment in business ventures with risk long predates limited liability being attached to the corporate form. (In fact, it was the success the capitalist class achieved without that protection that enabled them to acquire the political power to get limited liability attached to the corporate form.)
It's only a risk for anyone loaning to the company, and they're choosing to make those loans despite the risk.
Having an LLC doesn't get you much special protection. You could make equivalent contracts with some assets securing the loan and other assets not securing the loan. The main purpose of the LLC framework is to standardize the whole thing.
> It's only a risk for anyone loaning to the company
No, voluntary lending is not the only way that corporations acquire liabilities, either now or at the time of limited liability was attached to the form. For instance, tort liability is a thing.
What you say is a bit dismissive of where Intel currently is. They are maybe a year behind TSMC and have been "printing" EUV in high volume since 2023 and shipping it in high volume since 2024.
Their latest node 18A is already in production and should be a lot closer to TSMC's latest and greatest, with the first products shipping early next year.
You need an army of wizards who are willing to do, for the most part, lab-tech work for lab-tech salary while having a graduate degree in relevant field
They don’t make good profits. TSMC has fairly mediocre numbers by the standard of the tech industry. Intel has really bad numbers for the last several decades. AMD was having so much trouble with foundries that they spun it off.
Bean counters/“profesional execs” have been in charge for a long time (as is usually the case when founder CEOs leave/die), middle managers are box checkers that can’t differentiate good employees from bad employees and nobody cares as long as salary&stocks are deposited in their account. All of this gets lost in the cogs of the 100k employee machine.
That is actually a big part of how TSMC got ahead. It's a race. All those years of being able to get PhDs to work midnight-8am (because you're the most prestigious employer in the country, by far) move you to the next node just a bit faster. It adds up.
How much money are those wizards making that Nvidia can't easily afford to both 1. pay them to come fix Intel's problems for a while, and also 2. pay TSMC to rescind their non-competes to enable them to do that?
It turns out when you are manufacturing nvidia's GPUs, Google's TPUs, AMD's CPUs and GPUs, Apple's processors, and the flagship smartphone chips from Qualcomm, MediaTek and Broadcom - and none of them can go elsewhere because your products are so far ahead of the competitors - that's pretty valuable.
Convincing TSMC to sell you their chipmaking trade secrets? You might as well try to convince Apple to sell you their smartphone division.
Get a PhD in some kind of esoteric field like chemical kinetics and then spend a decade learning about oxide surface conditioning under someone who spent their life working on it.
None of this stuff is published (externally) and there are no discussion forums or stack overflows to help you either. You need to get through academia, prove yourself, and then you can start working on a chance to get access to the trade secrets that make it possible.
After all that you will be placed as a researcher on a handful of steps in the multi-thousand step process of making SOTA wafers. And probably not make crazy money, but at this point, you're not in it for the money anyway.
Unlikely to pass anti trust, they failed already acquiring ARM back in time.
Edit: I see a lot of confusion on the topic. The anti trust does not need to be from US to be essentially binding, UK, EU, etc have also a de facto veto on mergers of global companies, even if those are US based, this is especially true in global sectors like semiconductors where everybody depends on everybody else from patents to machinery.
I don't think that's allowed under the terms of the x86/x86_64 cross-license deal with AMD.
That's why, for example, any meaningful collaboration between Intel and Nvidia under this partnership has to be released in the form of an Intel product using Nvidia tech, rather than an Nvidia product using Intel tech.
What I find somewhat humorous: AMD originally wanted to acquire Nvidia, but walked away when Jensen apparently insisted on becoming the CEO of the merged company.
I wonder how AMD would have fared against Intel post-Conroe if Jensen was CEO. They were behind but still competitive until the Bulldozer flop, only recovering with Zen (and even then it took a few generations for Zen to mature).
> only recovering with Zen (and even then it took a few generations for Zen to mature).
Zen was a beast from day one. Zen 1 more or less matched Intel on single-core perf and outmatched it on multicore. Zen 1 blew Intel out of water on perf/$, so much so that the morning after booting up my Zen 1 computer, I bought as many AMD shares as I could afford.
Zen1 was further behind in ST perf than Intel is today in it's desktop offerings. They really exploited their strength in MT and price, and showed that the market was already chafing under Intel's reluctance to go beyond 4 cores on their consumer line, presumably to avoid stepping on the toes of HEDT. But that just caused the competition to pretty much invalidate that entire line instead.
And I don't really see the situation being that obviously different if it was Nvidia who they merged with and Jensen was CEO.
The big issue was simply that AMD didn't have the cash at hand to both pay for ATI and maintain investment in R&D, at least without their next few products completely dominating the competition. I don't see a different CEO changing that. Unless Jensen was willing to value Nvidia significantly less than ATI at the time.
> And I don't really see the situation being that obviously different if it was Nvidia who they merged with and Jensen was CEO.
Hindsight is 20/20. I suspect Zen chiplet success was a result of AMD's deliberate strategy of design partnership with other companies (XBox, PlayStation) and re-using IP[1]. Jensen might not have done the same road on partnerships, or may have chosen the Arm (Tegra) over doubling down on x86
1. There's an informative interview with Lisa Hsu from 2 years ago that lays out the strategy. It's not a big leap to imagine Infinity Fabric eas designed to increase design flexibility across disparate workloads. The impression I got from the multistage Apple-Nvida fallout is that Nvidia probably doesn't have a culture of accepting notes on it's products.
Different country (UK vs US) + different administration might change the results. Who said you can't just try the same thing over and over again until it works?
"De facto" is the keyword there. Only the nation of origin has any say on company management and infrastructure in a de jure manner. The only power non-origin nations/entities have is via leveraging their ability to do business in the region and/or their local holdings.
Once again I am reminded of the circular nature of money flowing around in this economy. Michael Burry even commented on this, citing it as rhyming like other economic failures previously.
We should all be worried. When a company invests in it's customers it is extra exposed to the risk of that customer going under. If OpenAI fails, Nvidia loses sales and loses the money it invested in OpenAI.
I imagine it's a similar story. If Intel fails, Nvidia loses sales and this investment.
Yes exactly, not sure why I'm being downvoted, other replies are talking about general economic money velocity as if that's somehow relevant to this specific case.
I interpreted your post like what "krupan" posted in the separate sub-thread ("This is a much tighter circle than any of us should be comfortable with"), but maybe others interpreted it differently (the words of your post are quite generic...). Cheers :o)
This is a much tighter circle than any of us should be comfortable with. There are some horrible examples of companies investing in their costumers and then losing big when those customers fail.
Businesses fail long before all their customers fail. If Nvidia's sales decline and they lose their billions of dollars in investments at the same time you better believe their stock will tank. I'm not sure how you decided this is only medium risk. Especially when they have invested in customers with no profits (OpenAI) and/or severely depressed growth (Intel)
This dig at the relationships between these companies also seems odd to me. Isn't this fairly normal practice for companies within an industry? There are lots of examples of joint ventures, partnerships, alliances, investment and mergers and acquisitions between lots of other corporations that are in competition with each other. I don't see how it could be otherwise unless each corporation was entirely vertically integrated so that they never had to work with any other.
"There are lots of examples of joint ventures, partnerships, alliances, investment and mergers and acquisitions..."
And the deals Nvidia are making are different from all of those. Buying OpenAI stock so that OpenAI can buy Nvidia's products is very risky. Buying the management team and IP of Groq is a very weirdly structured deal. What was the benefit to Groq? What is the purpose of this Intel deal?
The problem is that there is all this capital and no place to put it, so yes it seems circular, but some of that is to be expected.
As for Burry, he recently called out the changes to how the big players are amortizing their capital expenses for all these data center build outs. He is correct in calling it out, but he's getting the wrong signal from it. Mores law died a long time ago, and now were basically hitting multiple walls at the same time: Node scaling at the chip fabs, power and cooling in the data center, and just more linear growth from product (because of all three factors).
Go back to 2008 ish time period. There were a lot of data centers that hit the wall with availability of power and cooling and they were hard problems to solve then. The solution was not to upgrade rather to "build new", and were seeing a lot of the same types of issues today.
Nvidia has unmaintainable margins, the memory manufacturing side is now in on the grift too... They are sucking up the profit while they can because the dip is going to be BRUTAL (likely a boon to consumers but neither here nor there).
The general concept of the velocity of money is not what I'm talking about, it's specifically about vendors buying equity in their users who then buy the vendors' goods, in a tight circular fashion. See the other comments for more.
So the largest individual shareholders of Intel are:
1. US Government
2. Nvidia
3. Softbank
Interesting turn of events for the company...
> So the largest individual shareholders of Intel are:
> 1. US Government
> 2. Nvidia
> 3. Softbank
Not quite. (1) US Govt at 9.9% (2) BlackRock at 8.4% (3) Vanguard at 8.3% (4) State Street Corp probably (5) Nvidia (6) Softbank at 2%
Hence the mention of "individual". Blackrock, Vanguard etc. don't own the shares themselves, but rather manage mutual funds/index funds/ETFs that millions of people participate in.
Otherwise these few companies are the largest holders of basically every security in existence.
Interestingly, the US Govt. is also not "an individual human" and Softbank and Nvidia are both publicly traded companies.
> Otherwise these few companies are the largest holders of basically every security in existence.
Indeed. Due to inclusion of Intel in S&P500 index funds and ETFs.
Together, institutional investors own over 50% of Intel Corporation, giving them a significant collective influence on major board decisions. https://finance.yahoo.com/news/67-institutional-ownership-in...
Big difference between the two.
A company can own lots of things (assets, IP, real estate, share of other companies), but shareholders of the company don't own or have direct access to that thing. If Intel pays dividends, it will go to Nvidia, not you. If Intel holds a shareholder vote, Nvidia leadership will be the one voting, and they don't have to listen to your opinion. They can also change or sell the holding without your permission.
If you own shares of Intel through a Vanguard fund, you do have actual ownership of Intel. You can cast a vote same as every other shareholder. The dividend they issue will be passed on to you. Vanguard is simply acting as a proxy.
Don’t disagree. I think the point I’m trying to make is that the idea of “individual investor” captures a range of attributes, but some of which are also shared by non-individuals or are not shared with “individual humans”.
So I generally think wha is more useful is saying in what particular ways “individual investor” is meant when it is used in debate, decision-making, etc.
I don’t think this isn’t true. If you buy VOO, you’re buying shares in a fund that owns shares of S&P 500 companies. The managers of that fund are free to exercise their voting rights however they please. The reason why Vanguard shouldn’t be considered an individual investor is because Vanguard has chosen to delegate its votes to the fund owners. This is just a choice, they could easily choose differently in the future.
> Interestingly, the US Govt. is also not "an individual human"
The individual human called Citizens United is casting a side eye.
Crap I always thought individual is a singular.
splitting hairs at this point tbh
Who controls the votes? I don't think most ETFs pass voting rights to their owners.
The fund manager casts those votes. They publish how they vote under a "Proxy Voting Guidelines" document. At least I've seen such documents from Fidelity and Vanguard
ownership through funds shouldn't count
For sure, it’s just a common conspiracy theory boogeyman from people who don’t know how ETFs work.
BlackRock Investment Stewardship (BIS) team votes even in the name of ETF holders who don't specify their preferences. There are plenty of controversies after reviews of their voting like "voted against a record 91% of all shareholder proposals — and against 93% of those focused on environmental and social issues" (2023). That's from the 2nd result in a simple web search.
Why is that controversial? Is it expected that the majority of shareholder proposals would be things that you would be criticized for not voting for? It's a bit like saying that someone voted against 91% of bills in congress. That could be good if they were bad bills!
They shouldnt be voting at all
[flagged]
How long until NVIDIA realises that they have a larger budget for military protection of Taiwan than the US Government and takes matters into their own hands?
“The chips must flow…”
USA spends $1T+ per year on "defense".
Nvidia's entire annual operating expense is about $21B.
So I'd say they have a little way to go.
Their revenues last quarter were $57B and by all accounts that’s still increasing! If they hire asian locals to cut costs, then they’re within spitting distance of US Military spending, adjusted for purchasing power.
Keep in mind they won’t need to pay for nuclear weapons maintenance, veterans, etc… so there’s hundreds of billions in savings right there.
They could also just issue more shares and raise a trillion or two through the capital markets.
They could call it West India trading company.
I'm willing to be convinced different, but I think it would be better if companies had to be owned by a person or people ie that companies can't own companies.
It seems a layer of indirection that is more harmful than useful.
As somebody who really appreciates being able to own a ton of different companies in small amounts in my retirement account, I'm not sure if this is the right way to solve the problem.
Requiring full disclosure of all ownership stakes, traceable back to individuals, is probably a better route for this.
And it seems that there's a trend towards that, last company I registered had a new process for listing beneficial ownership of all significant amounts. Just need to push that legislation further.
I'm not sure what you see as a difficulty here. You own a bit of those companies. You're a person.
What do you see as the problem?
I want a third party to manage the buying and selling of shares as I incrementally put in small amounts of money every week into the fund.
Technically I own the fund, and the fund owns the companies. As I understand your comment, this would be disallowed.
You can do this but you should also relinquish all voting rights of said companies. When companies like Blackrock, State Street, Fidelity, Vanguard, etc all sit on the same boards, you're going to get decisions being forced that may not be good for the company, workers, customers, or country. Doubly so when they're sitting on two competing companies boards.
You can allow mutual funds or ETFs or whatever similar instrument, but they should not be allowed to have a vote or say in the company.
You could either make an exception for funds, or simply make them owned directly. Probably impossible before computerisation but fairly straightforward now.
These don't seem difficult problems to me.
The difficult problem is how you distinguish a fund for consumers versus the types of funds you want to disallow. Start trying to codify that in law and it will quickly bring people finding the edges for their own purposes.
Full public disclosure of all beneficial ownership in entities would go a lot further, IMHO.
All funds are for consumers, because companies can't own funds.
I think your full disclosure is actually fundamentally the same as my proposal.
If I am running a business in the US and I want to set up shop in Canada or France, I have to register a second business in that country and have my US headquarters own it. What I want is for ownership of the foreign subsidiary to directly mirror the primary company's, and the most efficient way to do it is to just have the US company own the foreign one.
If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company. That means they can sell their shares of the foreign subsidiary independently of the headquarters, and the two companies' ownership will diverge over time. I am effectively forced to IPO the foreign subsidiary at the moment of their creation.
You can't assign ownership to the current CEO or board members, because that creates a conflict of interest. They'd be able to take a US company they manage and turn it into a foreign subsidiary they own.
This would also make joint ventures, mergers, and acquisitions far more difficult and complicated, if not impossible.
> If companies can't own companies, then instead I have to directly transfer ownership over the subsidiary to the shareholders of the primary company.
That sounds fine to me. They're different companies. Why shouldn't I be able to sell my shares in Amazon UK while keeping them in Amazon France?
Or countries could come to some agreement on cross country companies.
Your last paragraph is pretty meaninglessness. In all those circumstances two companies just become one.
banning corporate ownership of other companies would dramatically decrease the value of companies that people own. it would be much more difficult to sell your company. you might have built a successful company over the course of your life, and your children don't want to run it. Other companies in the same business but perhaps not in the same regious are good candidates to buy it. There are far fewer individuals with the assets to purchase a successful company.
should other companies wish to buy your company, they could still buy all the assets of your company, but not the company itself.
Honestly as a corporate lawyer I have never heard this view expressed, but it’s super interesting.
What are some obvious objections that would spring to your mind?
Edit: sorry, that was very abrupt! Nice to have your input. I would be interested to hear what you think would be problematic about the Idea.
It's inefficient in the case of a wholly-owned subsidiary to require company A's shareholders to hire lawyers, setup bank accounts, books, etc. for a separate company B which ultimately provides the same limited liability vis-a-vis third parties. Joint-ventures become tricky between corporations. Corporations can't hold potentially toxic assets. There are quite a few good ones. Interesting nonetheless.
Also as with all corporate law questions, <other jurisdiction> allows it, so we'll just go there instead.
I'm not sure I understand your first point. If a company can't own another company there's no such thing as a "wholly-owned subsidiary". If you buy a company they become the same company.
I'll try to stick to one thought at a time.
Also super unlikely, and only worth discussing except as a theoretical exercise. We just aren't undoing centuries of law. Same reason trusts are here to stay.
Less than 200 years unless I'm misreading. Doesn't seem that difficult to change.
It’s harmful until you are the one getting personally sued by random grifters.
We limit liability for risky ventures for a reason.
> We limit liability for risky ventures for a reason.
Because the investor class had the political powers to get that protection written into law for themselves, so as to externalize risks while privatizing rewards.
The alternative has been the government controlling which ventures are funded, at which point the government assumes the risk.
Would you rather the only entity with a monopoly on violence be liable for all risky ventures? What happens when the government has a very different ideology and goals than what you support?
Again, there is a reason the status quo of private capital doing risky business with limited liability tends to work better.
You don’t have to like it.
Limited liability is the government interfering.
Otherwise the liability wouldn't be limited. You'd have to pay all your debts.
> Limited liability is the government interfering
I agree. That was not the point I was making.
The government interferes here for good reason, as no one would start a business if they would be personally responsible for random things. The LL in LLC is Limited Liability. Most governments want to make it easy to start a business.
This is the status quo because it has been consistently better than the government doing everything and being liable for everything. With private companies, you have various branches of the government with some ability to correct or regulate matters when a private entity is liable or responsible for something.
In the alternative scenario, when something goes wrong and the government is liable, good luck getting the government to find itself liable.
> The government interferes here for good reason, as no one would start a business if they would be personally responsible for random things.
People started businesses for a very long time before limited liability existed. Heck, people continue to start businesses as general partnerships and sole proprietorships to this day, despite the fact that those forms do not feature limited liabiity, centuries after limited liability was first applied to some business forms. So, “no one would start a business if they would be personally responsible” is very clearly false.
> The alternative has been the government controlling which ventures are funded, at which point the government assumes the risk.
No, that's not even remotely true; private investment in business ventures with risk long predates limited liability being attached to the corporate form. (In fact, it was the success the capitalist class achieved without that protection that enabled them to acquire the political power to get limited liability attached to the corporate form.)
> private investment in business ventures with risk long predates limited liability being attached to the corporate form
Here you go - https://en.wikipedia.org/wiki/Bottomry
It's only a risk for anyone loaning to the company, and they're choosing to make those loans despite the risk.
Having an LLC doesn't get you much special protection. You could make equivalent contracts with some assets securing the loan and other assets not securing the loan. The main purpose of the LLC framework is to standardize the whole thing.
> It's only a risk for anyone loaning to the company
No, voluntary lending is not the only way that corporations acquire liabilities, either now or at the time of limited liability was attached to the form. For instance, tort liability is a thing.
Yes but there’s nothing stopping the shareholders of company A from forming company B rather than company A dropping it as a subsidiary.
Considering how much money Nvidia has, it might as well buy the whole company and bring Intel back from the brink.
The problems plaguing Intel are fundamental problems that money cannot easily solve, if at all.
Intel needs expertise that only a few hundred people on Earth have, and most of them are in Taiwan, already working for someone else.
You don't just buy an EUV and start printing, you buy an EUV and give it to a wizard to use as a wand. Intel needs wizards.
What you say is a bit dismissive of where Intel currently is. They are maybe a year behind TSMC and have been "printing" EUV in high volume since 2023 and shipping it in high volume since 2024.
Their latest node 18A is already in production and should be a lot closer to TSMC's latest and greatest, with the first products shipping early next year.
You need an army of wizards who are willing to do, for the most part, lab-tech work for lab-tech salary while having a graduate degree in relevant field
> for lab-tech salary
This is something I don't understand. These companies make good profits -- why don't they pay their experts well?
> These companies make good profits
They don’t make good profits. TSMC has fairly mediocre numbers by the standard of the tech industry. Intel has really bad numbers for the last several decades. AMD was having so much trouble with foundries that they spun it off.
Bean counters/“profesional execs” have been in charge for a long time (as is usually the case when founder CEOs leave/die), middle managers are box checkers that can’t differentiate good employees from bad employees and nobody cares as long as salary&stocks are deposited in their account. All of this gets lost in the cogs of the 100k employee machine.
...and work graveyard shift.
That is actually a big part of how TSMC got ahead. It's a race. All those years of being able to get PhDs to work midnight-8am (because you're the most prestigious employer in the country, by far) move you to the next node just a bit faster. It adds up.
> get PhDs to work midnight-8am
Why work smarter or harder? Do both!
How much money are those wizards making that Nvidia can't easily afford to both 1. pay them to come fix Intel's problems for a while, and also 2. pay TSMC to rescind their non-competes to enable them to do that?
Intel's market cap is US$ 174.96 Billion
TSMC's market cap is US$ 1.560 Trillion
It turns out when you are manufacturing nvidia's GPUs, Google's TPUs, AMD's CPUs and GPUs, Apple's processors, and the flagship smartphone chips from Qualcomm, MediaTek and Broadcom - and none of them can go elsewhere because your products are so far ahead of the competitors - that's pretty valuable.
Convincing TSMC to sell you their chipmaking trade secrets? You might as well try to convince Apple to sell you their smartphone division.
How one become a wizard like that?
Get a PhD in some kind of esoteric field like chemical kinetics and then spend a decade learning about oxide surface conditioning under someone who spent their life working on it.
None of this stuff is published (externally) and there are no discussion forums or stack overflows to help you either. You need to get through academia, prove yourself, and then you can start working on a chance to get access to the trade secrets that make it possible.
After all that you will be placed as a researcher on a handful of steps in the multi-thousand step process of making SOTA wafers. And probably not make crazy money, but at this point, you're not in it for the money anyway.
> None of this stuff is published (externally)
It's important to note that it wasn't always like this. Up until the mid-90s this stuff was all published in the open literature fairly quickly.
There has been a steady culture shift towards ultrasecrecy since then.
Realistically, identify the next technology that will need such wizards and get into a PhD program to research that technology.
Unlikely to pass anti trust, they failed already acquiring ARM back in time.
Edit: I see a lot of confusion on the topic. The anti trust does not need to be from US to be essentially binding, UK, EU, etc have also a de facto veto on mergers of global companies, even if those are US based, this is especially true in global sectors like semiconductors where everybody depends on everybody else from patents to machinery.
They could just license all the IP, and hire away all the Engineers and executives... :)
I don't think that's allowed under the terms of the x86/x86_64 cross-license deal with AMD.
That's why, for example, any meaningful collaboration between Intel and Nvidia under this partnership has to be released in the form of an Intel product using Nvidia tech, rather than an Nvidia product using Intel tech.
Maybe all the engineers, but not the executives who created this problem to begin with
We could just force them into a RAND licensing regime and let the market solve the problem.
It would kind of match AMD’s acquisition of ATI.
https://en.wikipedia.org/wiki/ATI_Technologies
What I find somewhat humorous: AMD originally wanted to acquire Nvidia, but walked away when Jensen apparently insisted on becoming the CEO of the merged company.
https://www.tomshardware.com/pc-components/gpus/insider-says...
I wonder how AMD would have fared against Intel post-Conroe if Jensen was CEO. They were behind but still competitive until the Bulldozer flop, only recovering with Zen (and even then it took a few generations for Zen to mature).
> only recovering with Zen (and even then it took a few generations for Zen to mature).
Zen was a beast from day one. Zen 1 more or less matched Intel on single-core perf and outmatched it on multicore. Zen 1 blew Intel out of water on perf/$, so much so that the morning after booting up my Zen 1 computer, I bought as many AMD shares as I could afford.
Zen1 was further behind in ST perf than Intel is today in it's desktop offerings. They really exploited their strength in MT and price, and showed that the market was already chafing under Intel's reluctance to go beyond 4 cores on their consumer line, presumably to avoid stepping on the toes of HEDT. But that just caused the competition to pretty much invalidate that entire line instead.
And I don't really see the situation being that obviously different if it was Nvidia who they merged with and Jensen was CEO.
The big issue was simply that AMD didn't have the cash at hand to both pay for ATI and maintain investment in R&D, at least without their next few products completely dominating the competition. I don't see a different CEO changing that. Unless Jensen was willing to value Nvidia significantly less than ATI at the time.
> And I don't really see the situation being that obviously different if it was Nvidia who they merged with and Jensen was CEO.
Hindsight is 20/20. I suspect Zen chiplet success was a result of AMD's deliberate strategy of design partnership with other companies (XBox, PlayStation) and re-using IP[1]. Jensen might not have done the same road on partnerships, or may have chosen the Arm (Tegra) over doubling down on x86
1. There's an informative interview with Lisa Hsu from 2 years ago that lays out the strategy. It's not a big leap to imagine Infinity Fabric eas designed to increase design flexibility across disparate workloads. The impression I got from the multistage Apple-Nvida fallout is that Nvidia probably doesn't have a culture of accepting notes on it's products.
Different country (UK vs US) + different administration might change the results. Who said you can't just try the same thing over and over again until it works?
"De facto" is the keyword there. Only the nation of origin has any say on company management and infrastructure in a de jure manner. The only power non-origin nations/entities have is via leveraging their ability to do business in the region and/or their local holdings.
> The only power non-origin nations/entities have is via leveraging their ability to do business in the region and/or their local holdings.
Which is absolutely enormous, so this distinction is splitting hairs.
Depends on the area/region. But not really.
But believe what you like.
The current administration would let them do it.
I think they'd allow it so they can build a US based foundry behemoth
it prob would if there was some circular deals intel could provide to inflate the ecobubble
I’ve heard that centrally planned economies are great.
Once again I am reminded of the circular nature of money flowing around in this economy. Michael Burry even commented on this, citing it as rhyming like other economic failures previously.
We should all be worried. When a company invests in it's customers it is extra exposed to the risk of that customer going under. If OpenAI fails, Nvidia loses sales and loses the money it invested in OpenAI.
I imagine it's a similar story. If Intel fails, Nvidia loses sales and this investment.
Stop worrying and figure out how to short it.
Yes exactly, not sure why I'm being downvoted, other replies are talking about general economic money velocity as if that's somehow relevant to this specific case.
I interpreted your post like what "krupan" posted in the separate sub-thread ("This is a much tighter circle than any of us should be comfortable with"), but maybe others interpreted it differently (the words of your post are quite generic...). Cheers :o)
Money flowing in a circular manner is the definition of economy.
This is the reason we moved to using money instead of a barter system.
This is a much tighter circle than any of us should be comfortable with. There are some horrible examples of companies investing in their costumers and then losing big when those customers fail.
It’s a medium risk high reward strategy. You only fail here if all the customers fail, which admittedly there’s a chance of.
If one succeeds, and grows 10-100x, you are profitable. If a few succeed, you double your market cap.
Businesses fail long before all their customers fail. If Nvidia's sales decline and they lose their billions of dollars in investments at the same time you better believe their stock will tank. I'm not sure how you decided this is only medium risk. Especially when they have invested in customers with no profits (OpenAI) and/or severely depressed growth (Intel)
I did not say Nvidia does not have risk.
I specifically meant this circular investment idea is medium risk.
Of course Nvidia can tank if sales decline.
This dig at the relationships between these companies also seems odd to me. Isn't this fairly normal practice for companies within an industry? There are lots of examples of joint ventures, partnerships, alliances, investment and mergers and acquisitions between lots of other corporations that are in competition with each other. I don't see how it could be otherwise unless each corporation was entirely vertically integrated so that they never had to work with any other.
"There are lots of examples of joint ventures, partnerships, alliances, investment and mergers and acquisitions..."
And the deals Nvidia are making are different from all of those. Buying OpenAI stock so that OpenAI can buy Nvidia's products is very risky. Buying the management team and IP of Groq is a very weirdly structured deal. What was the benefit to Groq? What is the purpose of this Intel deal?
> Once again I am reminded of the circular nature of money flowing around in this economy.
Its called the velocity of money, its a thing see: https://en.wikipedia.org/wiki/Velocity_of_money
The problem is that there is all this capital and no place to put it, so yes it seems circular, but some of that is to be expected.
As for Burry, he recently called out the changes to how the big players are amortizing their capital expenses for all these data center build outs. He is correct in calling it out, but he's getting the wrong signal from it. Mores law died a long time ago, and now were basically hitting multiple walls at the same time: Node scaling at the chip fabs, power and cooling in the data center, and just more linear growth from product (because of all three factors).
Go back to 2008 ish time period. There were a lot of data centers that hit the wall with availability of power and cooling and they were hard problems to solve then. The solution was not to upgrade rather to "build new", and were seeing a lot of the same types of issues today.
Nvidia has unmaintainable margins, the memory manufacturing side is now in on the grift too... They are sucking up the profit while they can because the dip is going to be BRUTAL (likely a boon to consumers but neither here nor there).
The general concept of the velocity of money is not what I'm talking about, it's specifically about vendors buying equity in their users who then buy the vendors' goods, in a tight circular fashion. See the other comments for more.
Going to the September article, I see:
> The stake will make Nvidia one of Intel's largest shareholders, giving it roughly 4% of the company after new shares are issued.
Is that 4% still accurate?
At some point money from outside the sector is supposed to come in to the sector, right?
That should ensure Intel stops being the only viable AI competition to Nvidia.
I'm sure this will be fine when Nvidia stock finally tanks
Well, that's dark.
The circle jerk gets increasingly jerkier.