VOL. XCIV, NO. 247

MOAT TYPE BREAKDOWN

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Tuesday, December 30, 2025

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Supply moat

Preferential Input Access Moat

5 companies · 5 segments

A supply-side moat where a company has priority or advantaged access to scarce inputs (materials, components, capacity allocations, sites, talent, or infrastructure). When inputs are constrained, the advantaged player can keep producing, maintain quality, and often earn scarcity rents while competitors are rationed.

Domain

Supply moat

Advantages

5 strengths

Disadvantages

5 tradeoffs

Coverage

5 companies · 5 segments

Advantages

  • Production continuity: can meet demand during shortages while rivals miss deliveries.
  • Quality stability: avoids forced substitutions that degrade performance or increase defects.
  • Pricing power: scarcity enables better pricing and contract terms (prepay, longer duration).
  • Market share gains: reliable supply wins customers, often permanently shifting share.
  • Planning edge: supply visibility improves capacity planning, inventory strategy, and capex timing.

Disadvantages

  • Fragility to supplier dependence: overreliance on a few inputs or vendors creates single-point failure risk.
  • Cost volatility: even with access, input price spikes can compress margins if not pass-through.
  • Diffusion over time: suppliers expand capacity or reallocate, reducing the advantage.
  • Policy/geopolitical risk: export controls, sanctions, or local content rules can disrupt access.
  • Opportunity cost: prepayments and commitments can become burdensome if demand softens.

Why it exists

  • Scarcity and allocation: critical inputs are capacity-constrained or geographically limited.
  • Incumbent relationships: long-term partnerships, reliability, and volume earn priority treatment.
  • Contractual protections: take-or-pay, prepayments, exclusivity, or reservation agreements secure supply.
  • Integration and co-development: suppliers tune processes to the incumbent, making allocation sticky.
  • Scale and creditworthiness: large buyers can commit volume and fund expansion that smaller rivals cannot.

Where it shows up

  • Advanced manufacturing supply chains (semis, batteries, aerospace components)
  • Critical raw materials and chemicals (high-purity inputs, specialty formulations)
  • Capacity-constrained logistics and infrastructure (ports, rail slots, warehousing near hubs)
  • Real estate and sites (prime locations, zoning-entitled land, grid interconnect-ready plots)
  • Skilled talent bottlenecks (cleared labor, specialized engineers, field technicians)
  • Energy-constrained operations (power availability for data centers, industrial loads)

Durability drivers

  • Long-term contracts with enforceable allocation and pricing mechanisms
  • Supplier diversification and dual-sourcing without sacrificing quality
  • Co-development and integration that makes the incumbent the supplier’s default partner
  • Strong financial profile and reliability as a customer (pay on time, stable forecasts)
  • Strategic inventory and logistics capability (buffering without bloating working capital)

Common red flags

  • Access is based on one relationship with no contractual protection
  • Input dependence is extreme with weak contingency plans (no alternates, no buffers)
  • Prepayment/commitments become a liability when demand slows (take-or-pay pain)
  • Competitors easily secure similar allocation, implying no real preference
  • Geopolitical or regulatory changes directly target the input source or trade flow

How to evaluate

Key questions

  • What exactly is scarce, and is the scarcity structural (years) or cyclical (quarters)?
  • Is access contractual and enforceable, or informal relationship-based?
  • How concentrated is the supply chain, and what is the single-point-of-failure risk?
  • Can competitors replicate access by paying more, funding capex, or signing similar contracts?
  • Does the advantage show up in outcomes (fill rates, lead times, share gains) during stress?

Metrics & signals

  • Fill rates, lead times, and on-time delivery during industry shortages
  • Contract coverage: % of key inputs under long-term allocation agreements
  • Supplier concentration (top suppliers’ share of COGS) and geographic concentration
  • Input cost exposure and pass-through ability (gross margin stability in shocks)
  • Inventory strategy indicators (days inventory on hand, stockout rates, obsolescence)
  • Customer retention and share shifts during constrained periods
  • Supplier capex co-investments and joint development programs

Examples & patterns

Patterns

  • Capacity reservation agreements that guarantee supply during industry shortages
  • Co-investment with suppliers to expand constrained capacity
  • Priority site access where permits/grid interconnect are scarce
  • Talent bottlenecks where incumbents have pipelines and clearances

Notes

  • Preferential input access is most valuable during stress. Evaluate it by looking at who shipped on time during shortages and who did not.
  • Treat relationship-based advantages as fragile unless they are backed by contracts, diversification, or structural constraints.

Examples in the moat database

Curation & Accuracy

This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).

Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.