7 ms·

Exciting about the progress but semi has always been boom and bust, I hope all the rush for investment will not create another down cycle.

by ivalm 5y ago

ddbb33 5y ago
I didn’t know that. Do you have some sources / examples?
- ksec 5y ago
  It is not entirely accurate to describe all semi are boom and burst cycle. But DRAM and NAND tends to follow that trend, although it finally manage to stabilise in the past decade mostly due to lack of competition ( or some calls it a cartel )
DoctorNick 5y ago
Yeah, because it's not like this exact thing has happened repeatedly since the emergence of capitalism.
- creato 5y ago
  The same thing happens in nature too (https://en.wikipedia.org/wiki/Lotka%E2%80%93Volterra_equations https://en.wikipedia.org/wiki/Lotka%E2%80%93Volterra_equatio...). Capitalism isn't the cause of everything you don't like.
  - mempko 5y ago
    Let's replace that phrase with past economic systems. 'The same thing happens in nature too. Feudalism isn't the cause of everything you don't like'. or how about 'The same thing happens in nature too. Slavery isn't the cause of everything you don't like'. Yet we clearly made progress getting rid of feudalism and slavery.
- monsecchris 5y ago
  We should let the government decide how many chips we need, they really outdid themselves on toilet paper last time.
  - vkou 5y ago
    Have we all already forgotten how the free market has failed to provide us with sufficient toilet paper through the spring of 2020?
    - monsecchris 5y ago
      Luckily the socialist utopias didn't have any toilet paper to begin with.
  - elygre 5y ago
    Where are you located, with a government that managed toilet paper output and availability?
    - 0-_-0 5y ago
      To be fair, toilet paper shortages in planned economies were definitely a thing. My grandmother stockpiled toilet paper way after the fall of communism, I never understood why as a kid. (Her habit would have come handy at the start of the pandemic though...)
      - baybal2 5y ago
        Month long toilet paper outages were a reality of life in USSR. Though, fresh pronts of "Pravda" never were. That "Pravda" was a very versatile material: from toilet paper, to packaging material, to building material as packing for cracks in walls, to an underlayer for wallpaper.
  - berkes 5y ago
    Such comments annoy me. I'm quite radical capitalist (European, though). But any time someone points out flaws in capitalism, people respond with 'but socialism is worse' or 'planned markets are bad too'. A false dichotomy as clear as you get. Capitalism has known flaws. That we should name, know and solve. A famous flaw is the pork cycle, which we see at work here. Pointing out such flaws is good, because it allows us to improve, or at least prepare for. Countering such statements with 'but communism is worse' helps noone.
totalZero 5y ago
There is a chance that what we are observing is different from the past demand spikes. The way we work and learn has changed, and it doesn't look like a reversion to pre-telework habits will ever fully occur. Several companies (including Salesforce, Twitter, Square, and Spotify) have said that telework will be a significant part of their post-pandemic reality. Meanwhile, electric vehicles are slowly but surely taking market share from internal combustion engines that use less than a third as much silicon. It feels like demand creation to me, and that means we ought to treat the prior capex roadmap for the industry as insufficient. Even in the absence of demand creation, fab concentration in Taiwan is increasingly a liability in a world where Chinese economic hegemony is growing. One way to mitigate future perturbations that may result from military conflict, natural disasters, or other interruptions in Taiwan's fabs would be to build greater capacity outside of Taiwan.
- threeseed 5y ago
  Also don't forget crypto which is still growing and demands custom hardware. And the continued move within the enterprise towards using cloud computing and SaaS products. No matter which way you look there is an increasing demand for silicon.
  - vmception 5y ago
    And of course whatever the car manufacturers were doing
  - nicoburns 5y ago
    Cryto may end up being a huge downturn in demand if it ever gets legislated against (not that unlikely if it's share of energy usage continues to grow significantly)
  - Anarch157a 5y ago
    With Ethereum adopting proof of stake, Bitcoin will be left as the only driver for mining hardware. Even they will have to move to proof of stake some day, since it's not sustainable. I believe that the bigest drivers for silicon demand will be IoT devices, including automobiles, especialy when they become more affordable in the 3rd world. The pressure from SaaS and cloud is more predictable than the consume market, sonthe semi industry can plan ahead, IoT not so much. Just see how the auto industry was caught by surprise by the increased demand.
drivebycomment 5y ago
The down cycle (to be exact, boom-and-bust cycle) is structurally inevitable in the semiconductor market. For the supply-demand feedback loop to work smoothly, you want the supply to be incremental and quick-to-respond to demand changes. The semiconductor fab is anything but. There are many other reasons for this https://www.forbes.com/sites/jimhandy/2014/05/28/the-3-reasons-semiconductor-experience-revenue-cycles/ https://www.forbes.com/sites/jimhandy/2014/05/28/the-3-reaso... but I think the critical reason is that when there's a supply shortage, there's naturally a race among suppliers to build more capacity as soon as they can, so that they can sell more, but the inherent time delay (measured in years) in building up the extra supply combined with the fact that a single new fab gets bigger and more expensive lead to inevitable oversupply, which causes the price drop, which reduces the amount of money to invest for the next cycle, which leads to undersupply a few years later, and rinse/repeat. The pandemic created one of the biggest demand spikes for semiconductor ever, and combined with the nationalistic stance on building own supply in each country, I suspect this spike will have a ripple effect for the next few years.

Exciting about the progress but semi has always been boom and bust, I hope all the rush for investment will not create another down cycle.

by ivalm 5y ago

Exciting about the progress but semi has always been boom and bust, I hope all the rush for investment will not create another down cycle.

ddbb33 5y ago

I didn’t know that. Do you have some sources / examples?

ksec 5y ago
It is not entirely accurate to describe all semi are boom and burst cycle. But DRAM and NAND tends to follow that trend, although it finally manage to stabilise in the past decade mostly due to lack of competition ( or some calls it a cartel )

DoctorNick 5y ago

Yeah, because it's not like this exact thing has happened repeatedly since the emergence of capitalism.

creato 5y ago
The same thing happens in nature too (https://en.wikipedia.org/wiki/Lotka%E2%80%93Volterra_equations https://en.wikipedia.org/wiki/Lotka%E2%80%93Volterra_equatio...). Capitalism isn't the cause of everything you don't like.
- mempko 5y ago
  Let's replace that phrase with past economic systems. 'The same thing happens in nature too. Feudalism isn't the cause of everything you don't like'. or how about 'The same thing happens in nature too. Slavery isn't the cause of everything you don't like'. Yet we clearly made progress getting rid of feudalism and slavery.
monsecchris 5y ago
We should let the government decide how many chips we need, they really outdid themselves on toilet paper last time.
- vkou 5y ago
  Have we all already forgotten how the free market has failed to provide us with sufficient toilet paper through the spring of 2020?
  - monsecchris 5y ago
    Luckily the socialist utopias didn't have any toilet paper to begin with.
- elygre 5y ago
  Where are you located, with a government that managed toilet paper output and availability?
  - 0-_-0 5y ago
    To be fair, toilet paper shortages in planned economies were definitely a thing. My grandmother stockpiled toilet paper way after the fall of communism, I never understood why as a kid. (Her habit would have come handy at the start of the pandemic though...)
    - baybal2 5y ago
      Month long toilet paper outages were a reality of life in USSR. Though, fresh pronts of "Pravda" never were. That "Pravda" was a very versatile material: from toilet paper, to packaging material, to building material as packing for cracks in walls, to an underlayer for wallpaper.
- berkes 5y ago
  Such comments annoy me. I'm quite radical capitalist (European, though). But any time someone points out flaws in capitalism, people respond with 'but socialism is worse' or 'planned markets are bad too'. A false dichotomy as clear as you get. Capitalism has known flaws. That we should name, know and solve. A famous flaw is the pork cycle, which we see at work here. Pointing out such flaws is good, because it allows us to improve, or at least prepare for. Countering such statements with 'but communism is worse' helps noone.

totalZero 5y ago

There is a chance that what we are observing is different from the past demand spikes. The way we work and learn has changed, and it doesn't look like a reversion to pre-telework habits will ever fully occur. Several companies (including Salesforce, Twitter, Square, and Spotify) have said that telework will be a significant part of their post-pandemic reality. Meanwhile, electric vehicles are slowly but surely taking market share from internal combustion engines that use less than a third as much silicon. It feels like demand creation to me, and that means we ought to treat the prior capex roadmap for the industry as insufficient. Even in the absence of demand creation, fab concentration in Taiwan is increasingly a liability in a world where Chinese economic hegemony is growing. One way to mitigate future perturbations that may result from military conflict, natural disasters, or other interruptions in Taiwan's fabs would be to build greater capacity outside of Taiwan.

threeseed 5y ago
Also don't forget crypto which is still growing and demands custom hardware. And the continued move within the enterprise towards using cloud computing and SaaS products. No matter which way you look there is an increasing demand for silicon.
- vmception 5y ago
  And of course whatever the car manufacturers were doing
- nicoburns 5y ago
  Cryto may end up being a huge downturn in demand if it ever gets legislated against (not that unlikely if it's share of energy usage continues to grow significantly)
- Anarch157a 5y ago
  With Ethereum adopting proof of stake, Bitcoin will be left as the only driver for mining hardware. Even they will have to move to proof of stake some day, since it's not sustainable. I believe that the bigest drivers for silicon demand will be IoT devices, including automobiles, especialy when they become more affordable in the 3rd world. The pressure from SaaS and cloud is more predictable than the consume market, sonthe semi industry can plan ahead, IoT not so much. Just see how the auto industry was caught by surprise by the increased demand.

drivebycomment 5y ago

The down cycle (to be exact, boom-and-bust cycle) is structurally inevitable in the semiconductor market. For the supply-demand feedback loop to work smoothly, you want the supply to be incremental and quick-to-respond to demand changes. The semiconductor fab is anything but. There are many other reasons for this https://www.forbes.com/sites/jimhandy/2014/05/28/the-3-reasons-semiconductor-experience-revenue-cycles/ https://www.forbes.com/sites/jimhandy/2014/05/28/the-3-reaso... but I think the critical reason is that when there's a supply shortage, there's naturally a race among suppliers to build more capacity as soon as they can, so that they can sell more, but the inherent time delay (measured in years) in building up the extra supply combined with the fact that a single new fab gets bigger and more expensive lead to inevitable oversupply, which causes the price drop, which reduces the amount of money to invest for the next cycle, which leads to undersupply a few years later, and rinse/repeat. The pandemic created one of the biggest demand spikes for semiconductor ever, and combined with the nationalistic stance on building own supply in each country, I suspect this spike will have a ripple effect for the next few years.