317: Nvidia's Wheel Fell Off, Next Valeant?, Micron's US Capex, EV F-150 Inflation, Dogfighting a Real Pilot, Dow + X-Energy, and David McCullough & John Adams
"Incremental improvements get no respect"
The most interesting people are always the most interested people.
🎲⚔️🧙♂️👮🏻♂️🚔🏢 I tried something new recently.
I’ve been playing D&D with a group of friends for many years, half because I enjoy the game, and half because it’s a great reason to see your friends frequently, which isn’t otherwise easy once people have kids and other adult responsibilities. But I’ve always been a player, never a DM (the person who does the storytelling and runs the game).
I decided to give it a try.
I told my friends I wanted to do a short “one-off’ campaign, and I started planning. I didn’t tell them anything about it beforehand, so they were likely expecting fantasy-style swords & orcs.
Instead, I had them play a SWAT team in early 1990s LA who gets called to a building downtown where shots were fired and there was a possible hostage situation.
When they get there, the sign in the parking lot says “NAKATOMI PLAZA”.
Ah! They got the reference, but probably thought it was just a wink…
But I went pretty far with the Die Hard theme. They talked on the radio with someone on the inside, an NYPD cop called John! The leader of the bad guys is Hans and there’s a scene where he pretends to be an hostage and tries to shoot John, but the gun was unloaded, etc.
The goal was to make them live the film, but *not* from the perspective that we saw on screen.
I had lots of fun running the game, and I think the players had fun too.
It felt good to try a new thing, and both the planning stage and the actual game were enjoyable (I made Google Docs of story beats and character sheets for each SWAT member as well as for John McClane and the bad guys — I even had a printout of a map of the building with handwritten markings on it that they players find on a bad guy and can try to decipher for clues).
🍽 🚰 I did a 62-hour water fast this week. It had been a while since I had done a multi-day fast, so I wanted to ease myself back into it.
It went fine. All challenges were psychological, and mostly about deciding to do it rather than actually doing it. I’ll write more about fasting at some point…
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Business & Investing
One of Nvidia’s wheels fell off (good thing it’s not a motorcycle anymore…) 🏍
Semiconductors has always been cyclical and lumpy, I mean, look at these drawdowns — yet during that time period, the stock is up 44,000%+ at 30% CAGR ¯\_(ツ)_/¯
We’re seeing plenty of that cyclicality after the pandemic’s bullwhip effect messed up everybody’s supply and demand forecasts.
So Nvidia pre-announced a really bad quarter, especially in ‘gaming’:
Imagine how much rougher the seas would be for Nvidia if it hadn’t built up its data-center business over the past decade+..? Look at this chart from NextPlatform:
While the ‘gaming’ engine is sputtering right now — probably a mix of crypto bust + post-pandemic hangover on laptop sales and eating those capacity commitments to TSMC + gamers waiting for new generation Lovelace GPUs — the DC segment is still going strong and mitigating things significantly.
Other segments like automotive may someday play that role and help diversify the business and further increase resilience. It’s not hard to imagine that the DC segment may someday hit an air pocket while gaming and auto are going strong… NVDA 0.00
Micron’s $40bn 🇺🇸 memory manufacturing plan 💰💰💰💰
Speaking of semiconductor companies getting hit by a downcycle, Micron has announced some big capex plans for the US over the next decade, partly thanks to the CHIPS act:
[Micron] plans to invest $40 billion through the end of the decade to build leading-edge memory manufacturing in multiple phases in the U.S. [...]
[This will] ultimately create up to 40,000 new American jobs including approximately 5,000 highly paid technical and operational roles at Micron.
The details aren’t out yet, but they claim that this will help “grow domestic production of memory from less than 2% to up to 10% of the global market in the next decade, making the U.S. home to the most advanced memory manufacturing and R&D in the world.”
We’ll see. Like with Intel, this will likely depend on immigration reform that allows enough talent to come in the country… MU 0.00
The next Valeant? 💊 🧐
For a few years after the company imploded, it was common for everyone — especially short sellers writing powerpoints — to see “the next Valeant” everywhere, similarly to how Enron’s spectre stuck around for a decade+.
But did we find it? Does anything qualify? Or is this just another case of generals fighting the last war, and the next Valeant won’t actually look anything like Valeant? Was the next Valeant one of those crypto things that imploded? Is Tether the next Valeant? ¯\_(ツ)_/¯
⚡️ EV Inflation: Ford Jacks Up Price of F-150 Lightning 🛻🔌
Because of “significant material cost increases and other factors”:
The starting prices for the 2023 F-150 Lightning will now range from about $47,000 to $97,000, up from roughly $40,000 to $92,000 for the 2022 model-year. Prices exclude taxes and shipping/delivery costs.
Up between $6,000 and $8,500. That’s pretty material. F 0.00
Execs of China’s semiconductor ‘big fund’ arrested for corruption 🇨🇳🤔
China’s chipmaking industry descended into chaos last week, with at least four top executives associated with a state-owned semiconductor fund arrested on corruption charges. [...]
Established in 2014, the Big Fund was intended to use government money to build a supply chain of chips made in China, thus reducing reliance on the US and its allies. [...]
Eight years later, a total of $30 billion poured into the industry—with $20 billion more on the way—has yielded a complicated mix of successes and failures. The fact that the fund was driven by a political mission and not financial interests made it ripe for corruption, and analysts say the latest investigations may push China to manage semiconductor funding with more precision and professional knowledge.
Science & Technology
Dogfighting against a real fighter jet pilot in a simulator
First of all, I’m very impressed by this software. I somehow wasn’t familiar with it (Digital Combat Simulator World), and the more I look, the more it seems like a pretty amazing simulation (hard to call it just a game).
Here are a few other videos I enjoyed:
📏 Study: Incremental improvements get no respect 😅
As problematic entities worked to better their ways, participants shifted to dismiss them if they fell short of categorical reform—despite distinctions in improvement. This increased dismissal of relative gains as “all the same” was driven by the belief that falling short signals an eschewal of doing the bare minimum and lacking serious intent to change, making these gains seem less deserving of recognition. Critically, participants then “checked out”: They underrewarded and underinvested in efforts toward “merely” incremental improvement. Finally, in all experiments, participants lumped together absolute failures but not absolute successes, highlighting a unique blindness to gradations of badness. When attempts to eradicate a problem fail, people might dismiss smaller but critical steps that were and can still be made.
Yet incremental iteration does most of the heavy lifting in every field… Here’s the study.
Dow and X-Energy want to use a SMR as a thermal source in Gulf Coast chemical plant ☢️
Dow and X-energy will collaborate with the intent to deploy X-energy's Xe-100 high-temperature gas reactor technology at one of Dow's U.S. Gulf Coast sites – which is expected to be operational by approximately 2030.
The Xe-100 reactor plant would provide cost-competitive, carbon free process heat and power to the Dow facility. Dow also intends to take a minority equity stake in X-energy, working with the company to deploy small modular nuclear technology.
Interesting, and makes total sense. These large chemical facilities require both lots of power *and* heat, and nuclear reactors are a great source of both.
X-energy's Xe-100 is a Generation IV, high-temperature gas reactor built on decades of research, development and operating experience. Each reactor is engineered to operate as a single 80 megawatts (MW) electric unit and is optimized as a four-unit plant delivering 320 MW electric.
The reactor can provide clean, reliable and safe baseload power to an electricity system or support industrial applications with 200 MW thermal output per unit of high pressure, high temperature steam.
Here’s a video here showing more details about the design of the Xe-100. The way they use pebbles of fuel rotating through the reactor is pretty clever, and claims 60 years of continuous operations.
The Arts & History
Historian David McCullough dies & John Adams (2008, HBO) 📚🇺🇸
To honor the life of McCullough, whose books are on my shelf but I haven’t gotten to them yet (so many books, so few hours in the day!), I’d like to highlight how I indirectly got to know his work: The 2008 HBO mini-series based on his biography of John Adams (on which he worked for 7 years and for which he won a Pulitzer Prize).
It’s been some years since I saw it, but I remember LOVING it.
Sadly I don’t hear much about it anymore, so it seems like it has been mostly forgotten in the deluge of quality TV since.
I think it’s worth putting on your list if you haven’t seen it. It’s very well-made and gives one more perspective on fascinating historical events (we often hear about Washington, Jefferson, Hamilton, Franklin… But rarely see things from Adams’ point of view).