Broadcom: right franchise, wrong point in the capex cycle

The economics turn on utilisation. Fixed cost per wafer is set at the capacity decision; every point of utilisation above the planning assumption drops through at close to full incremental margin, and every point below does the reverse. Pricing disclosure carries it. Long-term agreements signed this quarter were struck above the prior cohort's realised price, which does not happen in a market where a substitute is available. The position: no call. This is a name I want to own and not at this level, so there is nothing locked here and nothing for the record to grade. If the entry improves I will say so in a piece that does carry a call. The main risk is timing rather than direction. Cycles in this industry have turned early and then stalled for two quarters more than once, and the position is sized for that rather than against it.