The Complexity of How People Think and the Challenges of Building a Semiconductor Industry

The Complexity of How People Think and the Challenges of Building a Semiconductor Industry

In our world, tribes are prevalent in various aspects of life, from countries to industries, from families to investment styles. These tribes shape the way people think and behave, as they are exposed to information that is carefully curated to present a certain image or increase their chances of success. However, it is important to remember that most things in the world are a mix of facts and emotions. For example, how much steel a factory can produce is a fact, but what investors are willing to pay for that output is an emotion-driven decision.

Emotions, unlike facts, cannot be predicted with a formula. This unpredictability is often misunderstood, leading to misguided feelings of jealousy. Jealousy arises when we only focus on certain aspects of someone's life that we want to emulate. However, if we are not willing to fully swap our lives with that person, there is no point in being jealous.

Additionally, both good times and bad times carry within them the seeds of their own transformation. Good times, through complacency and leverage, sow the seeds of their destruction. On the other hand, bad times present opportunities and drive us to find solutions to problems. Thus, it is important to recognize that nothing is static, and every situation holds the potential for change and growth.

Many people strive for efficiency and a life where no hour is wasted. However, this pursuit of efficiency can hinder our ability to explore new things and let our thoughts run free. Some of the most productive forms of thought occur when we allow ourselves the time to wander and delve into new ideas. Therefore, it is essential to strike a balance between efficiency and the freedom to explore.

The world we live in is complex, and complexity often sells better than simplicity. Complexity gives us a false sense of control, while simplicity may be mistaken for cluelessness. However, it is important to recognize that simplicity can often be the key to solving problems. Solutions to complex problems can sometimes be shockingly simple, but convincing people to follow simple advice can be incredibly difficult.

When it comes to investing, understanding the power of compounding is crucial. Extraordinary results can be achieved with even small changes if given enough time. Therefore, the focus should not be solely on achieving the highest returns but on sustaining the best returns over the long term.

Moving on to the world of technology, the article "Chips and China" highlights the challenges China faces in building its own semiconductor industry. It is not just about recreating companies like TSMC, but also the entire supply chain that supports chip manufacturing, including companies like ASML, Lam Research, Applied Materials, and more. This task becomes even more complex as many of these companies are not located in China. The integrated approach taken by companies like Intel, where they design and manufacture their chips, gives them more control over the entire process. In contrast, TSMC follows a modular approach, which allows for greater flexibility.

Building a semiconductor industry requires significant investment in fabs, which are incredibly expensive to build. However, the chips themselves have minimal marginal costs. This dynamic is similar to the software industry, where venture capital has played a crucial role in supporting chip companies and transitioning to software. Disruption is inevitable, and managers are often focused on leveraging their advantages rather than destroying them. To succeed in the semiconductor industry, companies must move down the learning curve and invest in processes that may not have great yields initially.

In conclusion, understanding how people think and the complexities they face in different aspects of life is crucial. It is important to strike a balance between efficiency and the freedom to explore. Additionally, recognizing the power of simplicity and the challenges of building a semiconductor industry can provide valuable insights. Here are three actionable pieces of advice:

• 1. Embrace complexity but strive for simplicity: While complexity may seem appealing, often the simplest solutions are the most effective. Don't be afraid to simplify complex problems and find straightforward solutions.

• 2. Focus on sustained returns: Instead of chasing the highest returns, aim for consistent and sustainable growth. This mindset can lead to extraordinary results over time.

• 3. Embrace disruption and invest in learning: Disruption is inevitable in any industry. Embrace change, invest in continuous learning, and be willing to adapt to new technologies and processes.

By incorporating these principles into our thinking and decision-making, we can navigate the complexities of life and potentially achieve remarkable results.