Intel

Question 1

what are the parts of a computer u dummy

Answer 1

motherboard, memory, microprocessor, storage device

Question 2

why is intel significant

Answer 2

Intel essentially started both the memory business and also the microprocessor business

Question 3

Why are semicondutors important

Answer 3

In 1965, GordonMoore noticed that the number of transistors per square inch on integrated circuits had doubled every 2 years. ―Doubles in speed and lowers cost
This has continued for 50+ years
Will likely meet its economic limit first―New semiconductor “fab” cost $6B―Technically possible, but too expensive―Distributed computing means desktop speed is less important

Question 4

Semiconductor manufacturing is a large industry dominated by US, Korea, Taiwan

Answer 4

• Semiconductors is $300Billion+ industry, growing at 6% CAGR
• Highly profitable, but cyclical business

Question 5

What are characteristics of semiconductor manufacturing

Answer 5

Large facilities requiring lots of fixed costs
―Processing and automation equipment
―Factories (also called “fabs”) maintain ultra-pure clean rooms
Complex manufacturing process has high marginal costs too
―Hundreds of process steps
―Long production time of 4+ weeks

Question 6

Intel and memory chips

Answer 6

• 1968: Started out making memory chips (DRAM, EPROM), putting more and more transistors on a chip (Moore’s Law)
• 1970s some competition, by 1980s Japanese entered with better quality, lower costs
• Initially, Intel denied it, then improved operational efficiency.

Question 7

What was the first inflection point of intel?

Answer 7

exit drams/memory and move to microprocessors

Question 8

What change in industry structure served as a catalyst for Intel to become the CPU leader?

Answer 8

-Intel invented the microprocessor, but were late bringing to market
-Apple II, based on Motorola processor was the first breakthrough
-Then IBM entered the market in 1981, they adopted open standards
PC industry structure shifted from vertical to horizontal

Question 9

Why did IBM choose open standards

Answer 9

IBM felt pressured by Apple’s initial success
IBM believed customers would purchase because of IBM brand
Wanted product to become PC standard
―>Network effects; value of product grows by more people using it
―>Economies of scale; lower fixedcosts /unit from higher production
IBM gave away the most valuable parts of the PC―Microprocessor (CPU) to Intel
Operating system to Microsoft

Question 10

Semiconductor industry provide temporary monopoly profits with new products

Answer 10

1) Intel commands premium pricing at product launch
2) When competition joins, then the prices starts to fall
3) Intel launches next generation of product

Question 11

TSMC

Answer 11

• TSMC is a contract manufacturer; also called a “ foundry”―Unlike Intel, which makes their own chips
• Ability to invest in latest technology, processes (experience curve)―Latest fab will be $20Billion
• Very successful; 56% of the contract manufacturing market―Market capitalization now exceeds Intel