Discussion on Terrafab and Semiconductors

You recently wrote an article on this on X

that went quite viral. Why is Terrafab underrated?

Why do you think it's so important?

Well, I think it's underrated because

I think people don't think it's going to work.

I think a lot of people view it.

And again, this is a systems level problem.

I'm just going to shit on a lot of other investors for a second.

It's been pretty wild for me as chips became all the rage again,

to brag for a second.

I've been obsessed with semiconductors since I was a little kid.

I literally bought NVIDIA shares in the IPO in 1999.

I was obsessed with semiconductor fabrication as a kid,

got really deep into the chemicals processes that go into making wafers.

If you think about the silicon industry

from the mid fifties when it started to the mid nineties,

the bottleneck, the hard thing was actually the chemical steps.

It was not lithography.

It's making ultra pure wafers, which require 20 plus chemical steps.

And there's a whole industry that had to get built around that.

And then it flipped to lithography and EUV

became probably the hardest single step in semiconductor manufacturing.

But there's all these investors that three years ago,

had never done anything in hardware,

had never thought about semiconductors that are brand new and think that they're experts.

And let me just say, I'm not trying to say I'm an expert.

There's a lot I need to learn,

but I've at least been paying attention to this field for a very long time.

And I'm watching these people come in with

what I'd call eighth grade level education on the industry,

trying to make definitive statements

around what the bottlenecks are, what's going to be hard.

And they're basically just parodying each other.

And it just reminds me a lot of when

people were trying to assess the likelihood of reusable rockets working

in say 2014, before it was actually working,

or the likelihood of Starlink working when I invested in 2019, 2020,

where most people, everyone would tell me to my face,

it will not work.

Or when people were saying that self-driving will never work.

And it's now, especially with camera only approach,

where Elon was a contrarian doing camera only,

rather than vision plus LIDAR.

And it just, all these things fit the same pattern

of people thinking superficially when they're brand new to a field,

and then having a strong kind of opinion on how things are gonna work.

And I just, I think that, I'm terrified,

but I think people are assigning way too low of a probability that it will work.

I personally. Feel confident that it will time frame.

There's questions, but I've thought through all the different steps and I

Almost everyone when you say talk about turf out there like

but what about EU V and EU V is

something that they first learned about in the last 18 months and

It's just it's comic it's comical to me and

then in terms of why it matters because for two reasons

one When you're trying to build a giant company

In hardware, it's usually supply chain bottlenecks.

It will kill you.

Here's an example from early Starlink days in

2020 when kovat happened there a bunch of supply chain bottlenecks

in the early terminal production line and

Like that team Elon and the amazing people at SpaceX

that worked their freaking asses off

They decided instead of accepting a few month supply chain bottleneck

they would start making the user terminals themselves and

so they literally took a parking lot in Hawthorne and

built a Pressurized tent giant like a giant pressurized tent

bought a bunch of old fab equipment like used fab equipment

started making the user terminals in a tent to

not be behind on the road on the ramp and

like these this is a one example of probably a

thousand of supply chain issues that Elon has had to go through with his companies and

It's just, if you haven't been building with Atoms,

you don't understand how challenging and fickle the supply chains are.

So the reason to me why TerraFab matters is just one,

it's owning the supply chain so that you have visibility and predictability

into what your weak points are on your timelines.

And two, as he said in his presentation,

if we want to ramp,

as Elon said, he will buy all the chips he can from Nvidia and everyone else.

But at the scale that he wants to operate,

you're going to need more than 10x the output of the current supply chain.

And so it just has to be in-house, even if it's hard.

Amazing.

We got a lot more than one hot take.

So thank you so much, Sean.

Thank you.

Peace. Thank you, Molly.