Mastercard
The payment network that learned the most profitable war is one you never finish.
The payment network that learned the most profitable war is one you never finish.
Mastercard holds 25-30% of the global payment network market, forming a stable duopoly with Visa. The two companies engage in tit-for-tat coevolution: when one introduces features (contactless payment, tokenization, biometric authentication), the other quickly matches. Neither maintains sustained differentiation in core functionality. Both maintain ~50% operating margins and have sustained profitability for decades.
This is mutualistic competition - arms races that benefit both participants rather than destructive zero-sum battles. Mastercard and Visa could theoretically fight for total market dominance through price wars, exclusive merchant contracts, and regulatory lobbying. Instead, they co-evolve, maintaining functional parity while differentiating on brand and experiences ("Priceless" vs. Olympic sponsorships). The result: both companies extract value from a growing pie rather than fighting over a shrinking one.
The lesson: mutualistic competition can be more lucrative than total victory. When network effects create multi-sided markets where all participants benefit from growth, maintaining a stable duopoly with high margins beats winner-take-all warfare that destroys industry profitability. Sometimes the enemy you know - who shares your interest in industry health - is more valuable than the monopoly that invites regulatory destruction.
Mastercard Appears in 9 Chapters
Demonstrates capacity buffer strategy by maintaining 10-15% excess fab capacity, enabling rapid scaling when 2020-2021 chip shortage hit while competitors remained constrained.
Capacity buffers as competitive advantage →Partnership with AMD provided advanced manufacturing capabilities (7nm, 5nm processes), enabling AMD to reach these nodes faster than Intel and contributing to AMD's competitive resurgence.
Strategic alliances in arms races →World's most critical keystone species in technology, manufacturing 92% of advanced chips. TSMC's removal would collapse multiple industries - iPhones stop existing, AI progress stalls, automotive electrification slows.
Keystone species in tech ecosystems →Maintains semiconductor leadership through asymmetric gene flow: 6,000-8,000 engineers imported annually, but only 5-7% attrition versus 15-20% industry average, protecting proprietary knowledge.
Talent migration as competitive strategy →Dominates leading-edge manufacturing with ~60% market share at advanced nodes. For many companies, TSMC is the only manufacturer with sufficient capacity, yield, and process maturity - making it functionally irreplaceable.
The irreplaceable manufacturer →Co-develops multi-year technology roadmaps with ASML, coordinating lithography capability with chip design requirements. Provided financial support for EUV development, signaling commitment and sharing risk.
Mutualistic technology partnerships →Manufacturing partner enabling AMD's refugia strategy against Intel. AMD's fabless model using TSMC's leading-edge processes achieved cost-effective manufacturing without $100+ billion capital investment.
Enabling competitive refugia →Operates 30-40% excess EUV lithography capacity, plus process redundancy, geographic redundancy (Arizona and Japan fabs), supply chain redundancy, and utility redundancy to handle droughts and earthquakes.
Redundancy at manufacturing's edge →Founded with counterintuitive pure-play foundry strategy. Chang spent 20 years building invisible infrastructure before the world noticed. When smartphones hit, the entire industry went fabless because TSMC's roots were too deep to match.
Twenty years of root development →