Interview: Sean Dustin Bliss — 2026-05-06
Key Themes
Industry Structure & Choke Points Sean walked us through the full semiconductor supply chain from sand to OEM, with particular emphasis on the extreme concentration at key nodes. ASML’s monopoly on bleeding-edge EUV equipment — supplying only TSMC, Global Foundries, and Samsung — creates a structural bottleneck that is 10-20 years ahead of any competitor. TSMC dominates both wafer fab and assembly. Intel is structurally weakened and largely out of the bleeding-edge game. This level of concentration makes supply chain intelligence at these nodes extremely high-value.
Distributor Role: Post-COVID Transformation Pre-COVID, distributors (Avnet, Arrow, Future/WT Electronics) were seen as margin drains and redundancy buffers in just-in-time models. Post-COVID, OEMs and Tier 1s want distributors to hold inventory for demand flexibility because OEMs lack warehousing expertise. This is a structural shift — distributors now offer 365-day payment terms vs. standard 30-day as a competitive moat. Sean has direct contacts at all three major distributors.
Demand Forecasting is Broken Sean described demand planning across the entire chain as “hand-wavy stupid ways” of prediction. No formal supply contracts — mostly good faith agreements. Each participant takes financial risk on inventory independently. Consumer sentiment drives more demand swings than formal planning. This is the clearest signal of an acute, unmet pain point.
Margin Dynamics Fabless chip suppliers capture 20-70% gross margins. Distributors in automotive: low single digits. Tier 1s: razor-thin, some negative recently. OEMs rely on service/repair for profit. Memory market is increasingly financialized — bidding to highest bidder during shortages.
Custom vs. ASSP Chips A single PCB can contain 100+ chips — mix of custom (NDA-required, minimum quantities) and off-the-shelf ASSP. This creates enormous complexity in tracking sourcing and availability across a board.
Notable Quotes
- “Hand-wavy stupid ways” of demand prediction — describing forecasting across the entire chain
- On distributors pre-COVID: valued only for redundancy, now valued for resiliency and inventory management
- On Tier 1 margins: “some negative in recent years”
- On Samsung: “You can’t just call up Samsung and say, can I use one of your wafer fabs”
Surprises
- The degree to which OEMs have already shifted to wanting distributors to hold inventory — this is an active, current structural change, not a future trend
- 365-day payment terms as a distributor competitive advantage — this is a financial instrument as much as a logistics service
- Moisture rebaking requirements as a contractual complexity in distributor agreements — highly operationally specific friction point we hadn’t anticipated
- Yield thresholds are binary and extreme: below 80% means scrap the entire wafer
Open Questions
- How do Tier 1s currently run their RFP/bidding processes with OEMs, and where does chip sourcing fit in?
- What does the actual contract/PO structure look like between distributors and Tier 1s — what data is exchanged?
- Is there a software layer any distributor is currently using for inventory expiration management, or is it all manual?
- How are allocation decisions made during shortage periods — what’s the actual process at the distributor level?