TSMC: The AI gods have spoken
A few Cassandras have recently dared raise a sceptical eyebrow about the sustainability of the AI boom, on the grounds that even the shiniest new technology needs to have some sort of nodding acquaintance with economic reality. But, true to form, their warnings have not reached the brass at Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, which has posted its sixth consecutive quarterly record and given guidance that demand “continues to be extremely robust” and remains “far above our capability today to supply”.
TSMC’s explanation for the surge in demand reflects a change in the way AI is being used, with the adoption of agentic AI and open-source AI models that consume meaningfully more compute per user interaction than a simple chatbot query. TSMC committed to capital expenditure through to 2028 that will be “significantly higher” than during the previous three years, a huge expansion of capacity to match its prediction that percentage point growth in AI-accelerator revenue will be in the mid-to-high 50s through to 2029.
With a dominant market position, unparalleled customer relationships and $90bn of net cash — along with ever-more gushing cash flows — to fund expansion at pace, TSMC’s moat is looking as close to impregnable as you could ever hope to see. This is clearly something that won’t have gone unnoticed by its rather larger neighbour across the Taiwan Strait, the People’s Republic of China, which has been greedily eyeing what it has viewed as a breakaway province since 1949. China is merely harassing Taiwan, but any escalation would send the global economy into immediate crisis.
Netflix: Fool me once
The streaming giant has announced the culling of about 1,000 jobs, or 6% of its global workforce, ahead of a quarterly results announcement that is expected to be about as underwhelming as one of the slew of Harlan Coben adaptations that Netflix has inflicted on its long-suffering customers recently. Its chief content officer, Bela Bajaria, has got the chop after the streamer won a mere 16 Primetime Emmy awards this year, down from 30 in 2025 and a record 44 back in 2021, that golden era of lockdown TV consumption.
Netflix has been increasing prices rapidly, particularly if you pay up to remain advertising-free, while the quality of its programming has dropped. Viewing time was up a mere 2% in the first half of this year, and in the US it has 8% of total screen time, compared with 14% for YouTube, which overtook Netflix on average daily viewing time last year. It is still spending $20bn a year on content, but Disney+ is spending $24bn despite having two-thirds as many subscribers.
Inflation is driving up the cost of production, with the final season of Stranger Things rumoured to have cost between $50m and $60m per episode, as opposed to $30m for season 4. It remains to be seen whether Netflix dodged a bullet when it failed to buy Warner Bros Discovery, but its acquisition by Paramount means the combined entity will represent another major challenge to Netflix’s once clear position as market leader. All this competition means a golden era for fans of sofa-based entertainment, but Netflix needs to sharpen up.
