Welcome back to This Week in Stratechery!
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On that note, here were a few of our favorites this week.
- The U.S. Gets Into the Chip Business. It’s a terrible idea for the government to take ownership of a private company; the widespread condemnation of the Trump administration getting a 10% equity stake in Intel is completely justified. And yet, I think it was the right decision anyways, because the alternative — a future without U.S. ownership of the critical IP and knowhow behind the production of the most important products in the world — is worse. The combination of TSMC strength and Taiwan precariousness means that the only way Intel can survive is with government help, and that’s been clear for a while; the difference now is that Intel can’t credibly promise would-be customers they will continue to exist unless the most interested party — the U.S. government — has skin in the game. — Ben Thompson
- KPop Demon Hunters and the Netflix Machine. I wasn’t familiar with KPop Demon Hunters until this week, and I don’t generally look to Stratechery to stay abreast of teen pop culture, but Wednesday’s Daily Update saw Ben analyze the most popular film in Netflix’s history, and as of last weekend, the biggest hit in U.S. movie theaters. The business angle of the story centers on Sony, the producer of the film that appears to have forfeited a billion dollars worth of upside by agreeing to a deal that saw Netflix bear $100 million in up-front development costs. The question Ben asks: would this budding franchise have ever been worth a billion dollars without Netflix and its platform amplifying the movie’s virality? It’s tempting to view the Demon Hunters business story as a parable about corporate myopia in which the rewards accrue to the wrong party—again, Sony was the one that conceived, developed, and produced the film—but the reality is, any theatrical release without Netflix acting as a promoter likely would’ve been a flop. The real story, then, is less about Sony’s corporate mistakes than a case study in Netflix’s unparalleled cultural and commercial power as an Aggregator. — Andrew Sharp
- What Is China’s Plan for AI Chips? On the heels of a months-long lobbying campaign from Nvidia to restore the company’s licenses to sell H20 chips to Chinese companies, a number of reports indicated that the Chinese government has told companies not to buy Nvidia’s H20 hardware. But why? Sinocism’s Bill Bishop and I discussed various Nvidia theories on this week’s episode of Sharp China. On one hand, it’s possible the government is withholding market access for Nvidia as leverage in a push for relaxed restrictions on more advanced hardware (and possibly high bandwith memory chips). On the other, with Huawei chips improving and DeepSeek set to release a new model allegedly running on those chips, it’s possible the government believes it would be strategically beneficial to end Nvidia reliance now, thereby creating urgency for domestic suppliers to push forward on both supply and performance, fully independent from the US. There are no firm answers for the time being—would Chinese companies buy a Blackwell chip?—but nearly three years on from the initial chip bans under President Biden, the plot continues to thicken. — AS
Stratechery Articles and Updates
- U.S. Intel — The U.S. taking an equity stake in Intel is a terrible idea; it also happens to be the least bad idea to make Intel Foundry viable.
- KPop Demon Hunters, Sony’s Risk, The Netflix Aggregator — KPop Demon Hunters is the hit of the year. Sony missed out, but they didn’t make a mistake; Netflix won the reward by being an Aggregator.
- Nvidia Earnings, Moats and China, Nvidia vs. the AI Labs — Nvidia’s earning continue to be governed by supply — and reasoning models make that even more the case. Plus, why Nvidia is so desperate to get back into China.
Dithering with Ben Thompson and Daring Fireball’s John Gruber
Asianometry with Jon Yu
Sharp China with Andrew Sharp and Sinocism’s Bill Bishop
Greatest of All Talk with Andrew Sharp and WaPo’s Ben Golliver
- Summer Top Fives: Role Players and Undomesticated Animals
- Summer Top Fives: Lost NBA Cities, Flyover States, American Airport Eponyms
Sharp Tech with Andrew Sharp and Ben Thompson
This week’s Stratechery video is on Facebook is Dead; Long Live Meta.