Intel Corp (INTC)

[fastpathguru]

Second (and more important), TSMC must include a wafer mark-up to SOC vendors in order to sustain their business, and afford future CapEx. I think they're sitting on a 40-50% gross margin business that just barely covers these costs. Which means that any SOC vendor buying from TSMC gets a hefty premium over raw cost of goods that Intel can get from their own factories. Whatever amortization advantage you think TSMC has, it's more than washed out by being a middle-man.

I like the way you think...

Yet (fact time) TSMC is growing and has higher net profit margin than Intel.

Go figure.

Looks to me like Intel actually has the far more sustainable business model.

And yet TSMC net margin is higher than Intel's, and for instance Apple's and Qualcomm's net margin are higher than Intel's, and together they make (far) more than Intel.

BTW: Intel's net margin for Q1 was a measly 15.6%, a huge drop from the previous Q, and a 5y low by my reckoning.

http://www.wikinvest.com/stock/Intel_(INTC)/Data/Key_Metrics

Your theoretical speculations aren't matching the reality of current events, where TSMC is CURRENTLY A) running extremely efficiently, B) increasing cash, and C) increasing capex spending, while Intel is CURRENTLY A) barely keeping any of their revenues, B) cutting capex, and C) are draining their rainy day funds.

That $2B (14%) drop in Intel's revenue ($1B less than expected) translated into a $1.7B, 40% hit to net income. THAT is what high overhead looks like.

Sure, Intel can take their foot off the gas pedal if they need to prop up earnings... and they are.

Meanwhile, TSMC is making hay AND putting the pedal to the metal, right now.

fpg