Demand has to decrease, there is no doubt about that. The question is will it be a hard or soft landing? I say soft for the foundries but that does not get easy clicks. The sky is not falling. The semiconductor industry is very diverse and much more crash resistant than ever before, absolutely, so no, history will not repeat itself as easily this time.
TSMC has the best data for forecasting based on hundreds of customers and 30+ years of servicing them. Covid was a new twist but I think TSMC handled it expertly. Listen closely to TSMC and cross check with the ecosystem. And now with live events back it is much easier to get a semiconductor sanity check. BY the way, EDA and IP are still growing double digits based on reporting companies and that does not include the China EDA/IP companies so it is actually higher.
One thing you should remember is that today's TSMC is not like TSMC of 10 years ago. Today's TSMC is VERY competitive. I would describe CC Wei's leadership style as "Speaking softly while carrying a very big stick". This is in stark contrast to Pat Gelsinger, Tom Caulfield, and Samsung leadership. CC Wei has positioned TSMC to be a competitive force in the foundry business. Look at the foundry landscape and tell me who would survive if TSMC took a scorched earth approach? GF doesn't make money today in the best of times. What if TSMC targeted GF customers directly? Is there anything GF does that TSMC can't? And even if there is can GF survive based on just that? Would Samsung be in the foundry business without the support of their memory business? The same goes for Intel, no IDM business no foundry.
The best market today for TSMC competitive foundries is the "Not TSMC" business. QCOM, NVIDIA, and others have kept Samsung Foundry on life support for many years to keep TSMC in check. The same can be said for GF and UMC. SMIC has a lock on the China market or they would be in the same boat. But when push comes to shove fabless semiconductor and system companies need a trusted supplier of wafers.