Semiconductor Industry News

SK Hynix to make deep capex cut as virus spread threatens chip output
https://www.reuters.com/article/us-sk-hy...SKBN1ZT385

Chip Industry Had Worst Sales Year Since Dot-Com Bubble Burst
https://au.finance.yahoo.com/news/chip-i...00507.html

Value investors receive their training by looking at the "supply side" of the capital cycle. Has semiconductors escaped this inevitably or history will rhyme again?

In the Middle of Transition: 2022 Semiconductor Outlook

A strongly held belief I have is that semiconductors are in the middle of a new golden age. I think that most of my readers would agree. But something that’s always concerned investors is the industry’s cyclicality. Of course, it worries me, too, but as the “chip shortage” has gone on longer and longer I’ve pretty much concluded that no one knows when it will end, and in many ways, this would be exactly what the shift from a cyclical industry to a secular market would look like. Let me explain.

Semiconductors seem to have swapped from a supply-driven industry to a demand-driven industry since the pandemic. That, to me, is the big key of what the cyclical-to-secular market would look like. Additionally, semiconductors actually grew through a recession, which is pretty telling for the secular argument.

https://www.fabricatedknowledge.com/p/in...ition-2022

(09-01-2022, 12:28 PM)weijian Wrote: Value investors receive their training by looking at the "supply side" of the capital cycle. Has semiconductors escaped this inevitably or history will rhyme again?

In the Middle of Transition: 2022 Semiconductor Outlook

A strongly held belief I have is that semiconductors are in the middle of a new golden age. I think that most of my readers would agree. But something that’s always concerned investors is the industry’s cyclicality. Of course, it worries me, too, but as the “chip shortage” has gone on longer and longer I’ve pretty much concluded that no one knows when it will end, and in many ways, this would be exactly what the shift from a cyclical industry to a secular market would look like. Let me explain.

Semiconductors seem to have swapped from a supply-driven industry to a demand-driven industry since the pandemic. That, to me, is the big key of what the cyclical-to-secular market would look like. Additionally, semiconductors actually grew through a recession, which is pretty telling for the secular argument.

https://www.fabricatedknowledge.com/p/in...ition-2022

we are now in transition into EVs which i think is the main contributing factor to high chip demand next 5-10years. 5G and more smart devices are also increasing in demand as we get more and more new homes with smart features.

Depends on how much capacity china is bringing online I guess. They are pushing hard for wafer fabs now, thats why companies like AMAT is doing well as they provide the wafer fabs with the machines to make chips (UMS also doing very well)

If china's new fabs suddenly all start producing in 5 years time we could get a glut of supplies then. But for next 2-3 years probably this sector will continue to outperform.

The forecast for the end of the year looks to be really bad. To put into context, the revenue forecast for 1QFY23 (end of calendar year period) is ~45% lower YOY compared to 1QFY22. It is even 20% lower than 1QFY20 (end of calender year 2019) where the last semiconductor downturn was.

How things have just sharply changed in 6 months!

Micron forecasts Q1 revenue below estimates as demand worsens

Spiralling demand had led to inventory build-ups, which in turn has forced companies to drive down the prices of chips. Research firm TrendForce forecast a 13 per cent to 18 per cent drop in Dram chips pricing, which makes over 70 per cent of Micron’s revenue, while also forecasting a 15 per cent to 20 per cent drop in Nand memory pricing for the last 3 months of 2022.

The company forecast adjusted current-quarter revenue to be US$4.25 billion, plus or minus US$250 million. Analysts on average expected revenue to be US$5.62 billion, according to Refinitiv data.

https://www.businesstimes.com.sg/technol...nd-worsens

The last downturn came from late 2018 onwards. We could argue that Covid-19 cut short the downturn and breathe new wind into the cyclical upturn - making many people lose discipline in their capital allocation and inventory ordering. It has been a good ride.

Chipmakers see ‘breathtaking’ drop in demand as recession looms

The companies themselves are bracing for a prolonged downturn. Samsung’s chip business head, Kyung Kyehyun, said he doesn’t see the memory market rebounding throughout next year. Kyung told employees at an internal event that Samsung cut its guidance for chip sales in the second half of this year by 32 per cent compared to a forecast in April, according to the Korea Economic Daily.

https://www.businesstimes.com.sg/technol...sion-looms

The whole semiconductor supply chain is a global ecosystem. The best circuit designers/integrators are found in Europe, the best thin film deposition tool makers are found in US, the best lithography tool maker is found in Holland and the best manufacturers are in Asia.

It is probably only possible to replicate this global ecosystem within your own ecosystem, over a few decades.

Battered by Covid-19, China hits pause on giant chip spending

Mr Xi’s administration grew frustrated that tens of billions of dollars funnelled into the industry over the past decade have not produced breakthroughs that allow China to compete with the US on a more equal footing.

In fact, SMIC and Yangtze, arguably the two most advanced Chinese semiconductor players, were crippled by US sanctions.

https://www.straitstimes.com/asia/east-a...p-spending

(09-01-2023, 11:01 AM)weijian Wrote: ...the best manufacturers are in Asia.

It is probably only possible to replicate this global ecosystem within your own ecosystem, over a few decades.

There is no intention to replicate the entire ecosystem but a narrow focus; the push behind the CHIPS act is largely to:

a) reduce dependency on mainland plants/manufacturers
b) create redundancy to TSMC / Tw in particular. 

IMO, it can happen faster but largely a cost issue.

(09-01-2022, 12:28 PM)weijian Wrote: Value investors receive their training by looking at the "supply side" of the capital cycle. Has semiconductors escaped this inevitably or history will rhyme again?

In the Middle of Transition: 2022 Semiconductor Outlook

A strongly held belief I have is that semiconductors are in the middle of a new golden age. I think that most of my readers would agree. But something that’s always concerned investors is the industry’s cyclicality. Of course, it worries me, too, but as the “chip shortage” has gone on longer and longer I’ve pretty much concluded that no one knows when it will end, and in many ways, this would be exactly what the shift from a cyclical industry to a secular market would look like. Let me explain.

Semiconductors seem to have swapped from a supply-driven industry to a demand-driven industry since the pandemic. That, to me, is the big key of what the cyclical-to-secular market would look like. Additionally, semiconductors actually grew through a recession, which is pretty telling for the secular argument.

https://www.fabricatedknowledge.com/p/in...ition-2022

This early 2022 article from Fabricated Knowledge didn't age very well....Face Palm in just 6 months. Sometimes these articles heralding "a new age" are always good contrarian indicators...

Nonetheless, Fabricated Knowledge has another article and it is worrying to see that even BYD has gotten into semiconductor mfg (in this case, trailing edge). All the subsidies (US, China, EU, Japan) that floating around now will almost guarantee that the semiconductor will continue to stay cyclical for the next few decades (as it had done in the previous few)

Chinese EV's and the Lagging Edge Price War

On one side, we have Western semiconductor giants, such as Texas Instruments (TXN), Microchip (MCHP), and Analog Devices (ADI). They have historically high inventories and are building new factories on the back of CHIPS Act subsidies. Texas Instruments now has over 200 days of inventory, banking on the longevity of its products. Microchip and Analog Devices will likely tread similar paths. The CHIPS act further motivates these Western firms to invest heavily now for the future.

Although the Chinese demand has been below expectations, there’s a clear distinction between companies focused solely on semiconductors, like STMicro and OnSemi, and those like BYD, which sell cars. BYD aims to maximize car sales profits by producing chips tailored for their vehicles. This vertical integration threatens the profitability of standalone semiconductor companies. Most of those standalone companies happen to be Western Semiconductor companies.

https://www.fabricatedknowledge.com/p/ch...gging-edge

Actually I think BYD is trying not to be hostaged like another Huawei, rather than focus on profit per se