> The custom silicon race has gone far beyond any possible profit margin scale at this point.
Well, that depends.
For companies making commodity components, or trying to sell devices made from commodity components, then yes, trying to make a profit from them is very hard. And in general, investing in R+D to make incremental improvements is not likely to see a good return on that money.
But if you are a vertically integrated company, and can design upcoming hardware around new hardware, and can sell those devices for a large profit, then the silicon chip race is awesome. Apple is pulling ahead in both high-performance laptops and mobile phones, and making huge profits from selling high-end products. Yes, there's lots of very cheap alternative devices out there, but there's a distinct lack of "almost as good as apple" products.
Without any serious competition for high-end devices, there is no pressure on Apple to reduce their prices....
And yes, that situation is not going to last forever, but an extra couple of 10's of billions of dollars profit per year, for however many years it lasts, is a nice bonus.