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Yes. This pattern has been repeating since the advent of mass-producing semiconductors. Most recently, 2016-2017, a new NAND technology emerged. Referred to as

Yes. This pattern has been repeating since the advent of mass-producing semiconductors. Most recently, 2016-2017, a new NAND technology emerged. Referred to as 3D NAND, it greatly increased bit-density and reduced cost of NAND flash. Samsung, Toshiba and to some extent Micron all decided they were going to lead that massive market. Moreover, the 3D NAND required many more layers and therefore more 'equipment per chip'. These three bought new equipment it required in record amounts. You'll see companies like Lam Research with revenue spikes in 2017. 2019, though, not so much. All the capacity came online at the same time, there was oversupply, the price of 3D NAND plummeted, and the chip companies pulled back buying dramatically, sending the equipment suppliers from feast to famine, again. I recall a 2-year period in the late '90s where the San Jose Mercury News headline in August read '1,000 Jobs Open at Lam and Applied' to one year later, 'Lam to Lay Off 1,500'.

iancmceachern 6y ago
I've worked in, and on the periphery of the semi world for much of my career and can second this. Not oy for direct employees but also the huge world of contractors and sub contractors that supply engineering services and equipment to the semi industry. It's very much a boom and bust industry, with huge swings from everyone is busy as could be to everyone is looking for work. It's difficult because many of the skillets and manufacturing processes for these systems are mostly specialized to this industry. Edited- typo.
- wbc 6y ago
  Thoughts on reducing the cyclical nature of this industry?
  - iancmceachern 6y ago
    The challenge is that to design a new line, or production cell, or process they need a broad range of expertise that is very specialized. For example, they may need folks that are phds/experts in plasma deposition/sputtering/etc. to do a bunch of multiphysics computer simulations to get the operation in the chamber right. Then they need folks with expertise in building the chambers, and associated cryo pumps, then they need robotics experts to architect, design and implement all the automation, chemical engineers for all the crazy chemistry going on, etc. It would be very expensive to keep all those folks on staff, and even harder to keep them all busy. I view it like the construction industry. I worked as a concrete/asphalt inspector for my local municipality in college and the cycles of the road repair industry are similar in my mind. In this world there are lots of "crews" that travel around the country following the work. They start in the south in the winter, and gradually work their way up to the north as the ground thaws and road construction can be done. They usually have a 2 week - 2 month contract in each town and then move on. No one area has enough work to keep them busy for a season. The industry is built on that ability to maximize work/profit and minimize downtime by moving from customer to customer as the work does also. I view it as similar for many of us who do/have worked in semi. When there is a glut of work, it's all good. When there isn't there are hundreds or thousands of highly skilled, highly specialized folks needing work. Those folks/consultancies typically are able to pivot to other industries that need the same skillets readily and easily (like medtech, aerospace, automotive, etc.) and keep working during the slow period for semi. The alternative would be for semi equipment designers/manufacturers (like ASML, etc) to rely more on in house permanent workforces and less on contractors and subcontractors but I fear a fundamental change like that may not be sustainable from a cost standpoint. These companies already have huge swings in their workforce numbers every few years, often hiring or letting go hundreds or thousands at a time. Edited - typo
- rhodozelia 6y ago
  I wonder what parallels can be drawn to the mining industry which is also very boom and bust due to cyclical nature of commodities prices and the lead time in bringing new supply to market
  - iancmceachern 6y ago
    And the effort needed to get something going. Just like in semi mining can be years of investment before anyone sees a dollar in returns.

iancmceachern 6y ago

I've worked in, and on the periphery of the semi world for much of my career and can second this. Not oy for direct employees but also the huge world of contractors and sub contractors that supply engineering services and equipment to the semi industry. It's very much a boom and bust industry, with huge swings from everyone is busy as could be to everyone is looking for work. It's difficult because many of the skillets and manufacturing processes for these systems are mostly specialized to this industry. Edited- typo.

wbc 6y ago
Thoughts on reducing the cyclical nature of this industry?
- iancmceachern 6y ago
  The challenge is that to design a new line, or production cell, or process they need a broad range of expertise that is very specialized. For example, they may need folks that are phds/experts in plasma deposition/sputtering/etc. to do a bunch of multiphysics computer simulations to get the operation in the chamber right. Then they need folks with expertise in building the chambers, and associated cryo pumps, then they need robotics experts to architect, design and implement all the automation, chemical engineers for all the crazy chemistry going on, etc. It would be very expensive to keep all those folks on staff, and even harder to keep them all busy. I view it like the construction industry. I worked as a concrete/asphalt inspector for my local municipality in college and the cycles of the road repair industry are similar in my mind. In this world there are lots of "crews" that travel around the country following the work. They start in the south in the winter, and gradually work their way up to the north as the ground thaws and road construction can be done. They usually have a 2 week - 2 month contract in each town and then move on. No one area has enough work to keep them busy for a season. The industry is built on that ability to maximize work/profit and minimize downtime by moving from customer to customer as the work does also. I view it as similar for many of us who do/have worked in semi. When there is a glut of work, it's all good. When there isn't there are hundreds or thousands of highly skilled, highly specialized folks needing work. Those folks/consultancies typically are able to pivot to other industries that need the same skillets readily and easily (like medtech, aerospace, automotive, etc.) and keep working during the slow period for semi. The alternative would be for semi equipment designers/manufacturers (like ASML, etc) to rely more on in house permanent workforces and less on contractors and subcontractors but I fear a fundamental change like that may not be sustainable from a cost standpoint. These companies already have huge swings in their workforce numbers every few years, often hiring or letting go hundreds or thousands at a time. Edited - typo
rhodozelia 6y ago
I wonder what parallels can be drawn to the mining industry which is also very boom and bust due to cyclical nature of commodities prices and the lead time in bringing new supply to market
- iancmceachern 6y ago
  And the effort needed to get something going. Just like in semi mining can be years of investment before anyone sees a dollar in returns.