The problem with supply exceeding demand isn't unsold inventory/capacity, it's that your profit margin gets slim enough that you can no longer fund the R&D and

The problem with supply exceeding demand isn't unsold inventory/capacity, it's that your profit margin gets slim enough that you can no longer fund the R&D and fab construction necessary to remain on the leading edge. This is especially apparent for memory chips that are more commoditized than processors. Boom and bust cycles frequently result in at least one major bankruptcy, merger or pivot away from leading-edge processes. Qimonda, Elpida, Winbond all had their heyday as major DRAM manufacturers. For logic fabs, casualties include Chartered, GloFo, UMC, Motorola/Freescale—all of whom were once able to manufacture competitive processors.