4 ms·

Could people have anticipated this and speculated to make a bunch of money (with the side effect of smoothing out the demand)? That is, bought a bunch of ... s

• bsder 6y ago
  Absolutely. Companies with stock are making bank--there aren't many of them and they're draining. Companies with their own fabs are making bank because they can prioritize their production runs by profitability. The problem is that inventory has both risk and weird tax consequences so nobody wants to hold it. The risk is simply that nobody ever wants the part so you lose the money you spent. The weird tax consequences are how you "write down" inventory--the problem is that the IRS lumps a lot of inventory into the same boat: bolts are sort of treated the same as semiconductors even though they have very different life cycles. The real lesson in all this is that there is no longer a surplus in worldwide fab capacity. The "fabless" semiconductor business plans relied on this surplus to beat up the "fab owning" companies for years. The fabs all just figured out that "Fabs are the walled garden" and the fabless guys just got a reminder that "Your profits are dependent on some else's platform and they can take it away." It will be interesting to see what the reckoning is after this all shakes out.