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Shift in Semi Demand, Large upside trend

Arthur Hanson

Well-known member
PCs and phones are mature and some in the financial community are saying the semi market is not the place to be. These analysts are short sighted and don't see the increasing penetration of semis into almost everything we touch. Intelligence is in the early stages of integrating into almost everything from almost every form of transportation, automation of everything, and platforms displacing much of the work in the professions. Semis main strength is being able to leverage almost everything they touch, and resources used. Platforms of all types, 3D printing, advanced manufacturing processes and everything becoming connected are all in their early stages. On top of this is the increasing speed of obsolescence of everything at an ever-increasing rate. Any shrink in demand will be temporary as when a market slows. the players will look for alternatives and there is an almost infinite number of immature markets that will become dominant players in their respective fields. At most any dip will just be a speed bump in the road forward. Many of the current analysts are chicken littles with limited vision and the sky is falling. Any thoughts, comments or additions sought and welcome.
 
Is semiconductor industry immune to macroeconomy?I doubt

There are sectors that are relatively unaffected by economic cycles,like food and healthcare. I don't think semiconductor is one of those,most consumer electronics aren't necessities.
 
Is semiconductor industry immune to macroeconomy?I doubt

There are sectors that are relatively unaffected by economic cycles,like food and healthcare. I don't think semiconductor is one of those,most consumer electronics aren't necessities.
Have to be honest putting a chip in everything is good for business , but is it necessary?

Do I need to know what my kettle and toaster are doing when I am at work?
 
Have to be honest putting a chip in everything is good for business , but is it necessary?

Do I need to know what my kettle and toaster are doing when I am at work?
No, semis aren't immune to the way our economy is currently run, but have the power to radically change and vastly improve how our economy is run on all levels and do the same for education. Our society hasn't caught up to vast power semis of all types ability is to improve and grow our economy at an accelerating that most can't even comprehend or envision.
 
I agree Arthur. While making no prediction on the trajectory of the recovery, I am certain that the best company going into this, TSMC, will emerge even stronger.
 
Totally agree. I’m using any weakness to load up more on the proven winner s. TSMC, Applied materials, LAM among others. Intel is dead money for many years though in my opinion.
That's what I thought. INTC is up about 20% in the last month. The rest of my investments should be such dead money.
 
The Berkshire Hathaway purchase of TSM stock has proven my point. We are in the very early stages of a dramatic shift of how our semis are integrated into literally everything and going to cause societal shifts that few, even in the industry have even imagined.
 
Is semiconductor industry immune to macroeconomy?I doubt

There are sectors that are relatively unaffected by economic cycles,like food and healthcare. I don't think semiconductor is one of those,most consumer electronics aren't necessities.
It isn't consumer electronics, it's platforms and AI/ML automating professions and giving real intelligence to machines taking automation to a whole new level. This trend will be fought bitterly by special interests' intent on protecting their turf from a future tidal wave of many types of tech that will render their fields and jobs unrecognizable by today's standards. Automating a very corrupt and entrenched healthcare system will be a mega market for semis of all types from simple to the most sophisticated powered by cutting edge AI.
 
Most financial analysts are pretty much focused on short investment, given they have to prove their capabilities to generate money for their investors.

Not many value-oriented investors like Warren Buffett focus on long-term investment; look at their holding on TSMC stocks, which is a good indicator of SEMI potential.
 
Is semiconductor industry immune to macroeconomy?I doubt

There are sectors that are relatively unaffected by economic cycles,like food and healthcare. I don't think semiconductor is one of those,most consumer electronics aren't necessities.
US healthcare ranks 37th worldwide in quality at the world's highest cost and will destroy the US financially unless it adopts tech on a broad and deep scale using semis not only in direct care, but platforms that render doctors' better quality and high productivity. US medical has become a criminal organization that is destroying the US economy by consuming twenty cents of every dollar also making them the largest criminal organization in world by not only skirting the law, but getting it to support the monopoly powers and severely hold back progress. I hope Apple becomes one of the leaders in this process of becoming a key part of reforming medical using the Apple ecosystem. Tim Cook of anyone might be the one person with Apple's resources and technology that could pull this off. I hope this gets back to him somehow. I also hope Tim Cook could cooperate with Mark Cuban who founded Cost Plus Drugs and has radically reduced the cost of many drugs. This is one of the largest opportunities in human history to improve, reform and reconfigure the entire structure of medical worldwide. I hope Mark Cuban and Tim Cook can be the leaders in advancing medical while reducing costs and increasing penetration. This is not the golden, but the platinum opportunity for those individuals, companies and countries that can master it. Improving human health not only helps physically but vastly improves the value of human capital through greater productivity of people at increased time at maximum productivity. This is the opportunity of staggering size for the semi sector and those companies that can master how to make this change happen from hardware to software. Semis will play a key part in this trend that will be worldwide and staggering in size. Increasing the human potential in every way possible and a no brainer and staggering opportunity for semis in more ways than most can even imagine.
 
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US healthcare ranks 37th worldwide in quality at the world's highest cost and will destroy the US financially unless it adopts tech on a broad and deep scale using semis not only in direct care, but platforms that render doctors' better quality and high productivity.
National rankings for medical care are notoriously biased, and usually constructed for supporting a political agenda. For example:


The US is dead last. Of course, if you do even the most superficial analysis of the data you find that the comparisons are purposely misleading. For example, Norway has a population of about 5 million, Sweden about 11 million, Netherlands about 18 million, Switzerland about 9 million. By US standards these are small markets. The healthcare system solutions are less complex for small rich countries than for the US. Two of the countries on this list, Canada and the UK, are said to have notorious waiting lists for diagnostics and procedures, and Canada even has a government web page for estimating the wait times for something as simple as an MRI.


I picked the Ontario example because that's the best-case province for infrastructure. Wait times in the US for diagnostic imaging are usually negligible, but the waiting lists are not factors in many of the rankings available. Interesting.

It is true that the US has the highest medical costs per capita of any developed country, but your estimate of 20% of US GNP is high. In 2021, it was apparently 18.3%, and that was with the pandemic skewing the results. (The skew includes a large increase in Medicaid coverage to a greater proportion of the population due to COVID legislation.) In 2019 healthcare was 17.7% of the economy, still high, but significantly lower than your claim.


As for AI improving healthcare, most of the value-add realized so far falls into two areas, medical image analysis and drug research, and most of that value is in software, not semiconductors.



AI-based healthcare as you're imagining it seems akin to self-driving vehicles. Yes, some tools will make healthcare professionals more efficient, like ADAS makes human drivers better, but after all of the hype investment in self-driving vehicles is decreasing. I think AI-based medical care reminds me, for the time being, of self-driving vehicles on public roads, and would make me wary of investing.


US medical has become a criminal organization that is destroying the US economy by consuming twenty cents of every dollar also making them the largest criminal organization in world by not only skirting the law, but getting it to support the monopoly powers and severely hold back progress. I hope Apple becomes one of the leaders in this process of becoming a key part of reforming medical using the Apple ecosystem. Tim Cook of anyone might be the one person with Apple's resources and technology that could pull this off. I hope this gets back to him somehow. I also hope Tim Cook could cooperate with Mark Cuban who founded Cost Plus Drugs and has radically reduced the cost of many drugs.
Labelling the entire US healthcare system as a criminal organization is ridiculous. For example, the Wall Street Journal has been taking aim lately at non-profit hospital systems in the US, like this one. They're following the letter of the law in some cases, however dubious their actions are:


The same with private equity money investing in healthcare, often by buying private medical practices and clinics. Disgusting, but legal:


I could on and on with examples, but I'm too lazy. IMO, the evidence says you're aiming at the wrong targets. I'm not a supporter of the current state of the US healthcare system, I think it needs far more regulation in pricing, administration, transparency, and efficiency than is in the laws. Nonsense like medical insurance networks, completely non-transparent pricing, every insurance company using different claim applications, the ability of insurance companies to deny claims for treatment prescribed by licensed physicians, legal drug pricing dictated solely by what the market will bear for target revenues and profits and supported by patent laws, and a convoluted drug market with middlemen distributors and secret agreements. I think some of our congresspeople see these problems as intractable and want to throw it all away in favor of a nationalized, single-payer approach, but I think there's evidence that some key issues could be addressed with targeted legislation that could be implemented without the risky strategy of blowing the entire healthcare system up and rebuilding it. In the past ten years or so, for example, the proliferation of using physician assistants and nurse practitioners to provide treatment when applicable for less complex issues in place of medical doctors has been a big win for treatment availability. For minor surgery, nurse anesthetists act in place of MD anesthesiologists. On the other hand, in my experience, many care facilities are charging almost as much for these lesser-trained people than those with MD degrees. Are these providers criminals? No. Would I trade the US healthcare system for one higher up in the suspicious rankings? I'm not sure.

Regarding Cost Plus Drugs, I'm a customer for the one drug I take (a generic statin), and the limitation of CPD is that they only deal with generics, which are not so much of an affordability issue. Yes, the savings are there, I save about 75% by using CPD, but it's 75% of about $8/month compared to, say, a Walmart pharmacy. The real affordability problems are in patent-pending (brand name) drugs for which there are no generic alternatives. I know you like CNBC:

 
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National rankings for medical care are notoriously biased, and usually constructed for supporting a political agenda. For example:


The US is dead last. Of course, if you do even the most superficial analysis of the data you find that the comparisons are purposely misleading. For example, Norway has a population of about 5 million, Sweden about 11 million, Netherlands about 18 million, Switzerland about 9 million. By US standards these are small markets. The healthcare system solutions are less complex for small rich countries than for the US. Two of the countries on this list, Canada and the UK, are said to have notorious waiting lists for diagnostics and procedures, and Canada even has a government web page for estimating the wait times for something as simple as an MRI.


I picked the Ontario example because that's the best-case province for infrastructure. Wait times in the US for diagnostic imaging are usually negligible, but the waiting lists are not factors in many of the rankings available. Interesting.

It is true that the US has the highest medical costs per capita of any developed country, but your estimate of 20% of US GNP is high. In 2021, it was apparently 18.3%, and that was with the pandemic skewing the results. (The skew includes a large increase in Medicaid coverage to a greater proportion of the population due to COVID legislation.) In 2019 healthcare was 17.7% of the economy, still high, but significantly lower than your claim.


As for AI improving healthcare, most of the value-add realized so far falls into two areas, medical image analysis and drug research, and most of that value is in software, not semiconductors.



AI-based healthcare as you're imagining it seems akin to self-driving vehicles. Yes, some tools will make healthcare professionals more efficient, like ADAS makes human drivers better, but after all of the hype investment in self-driving vehicles is decreasing. I think AI-based medical care reminds me, for the time being, of self-driving vehicles on public roads, and would make me wary of investing.



Labelling the entire US healthcare system as a criminal organization is ridiculous. For example, the Wall Street Journal has been taking aim lately at non-profit hospital systems in the US, like this one. They're following the letter of the law in some cases, however dubious their actions are:


The same with private equity money investing in healthcare, often by buying private medical practices and clinics. Disgusting, but legal:


I could on and on with examples, but I'm too lazy. IMO, the evidence says you're aiming at the wrong targets. I'm not a supporter of the current state of the US healthcare system, I think it needs far more regulation in pricing, administration, transparency, and efficiency than is in the laws. Nonsense like medical insurance networks, completely non-transparent pricing, every insurance company using different claim applications, the ability of insurance companies to deny claims for treatment prescribed by licensed physicians, legal drug pricing dictated solely by what the market will bear for target revenues and profits and supported by patent laws, and a convoluted drug market with middlemen distributors and secret agreements. I think some of our congresspeople see these problems as intractable and want to throw it all away in favor of a nationalized, single-payer approach, but I think there's evidence that some key issues could be addressed with targeted legislation that could be implemented without the risky strategy of blowing the entire healthcare system up and rebuilding it. In the past ten years or so, for example, the proliferation of using physician assistants and nurse practitioners to provide treatment when applicable for less complex issues in place of medical doctors has been a big win for treatment availability. For minor surgery, nurse anesthetists act in place of MD anesthesiologists. On the other hand, in my experience, many care facilities are charging almost as much for these lesser-trained people than those with MD degrees. Are these providers criminals? No. Would I trade the US healthcare system for one higher up in the suspicious rankings? I'm not sure.

Regarding Cost Plus Drugs, I'm a customer for the one drug I take (a generic statin), and the limitation of CPD is that they only deal with generics, which are not so much of an affordability issue. Yes, the savings are there, I save about 75% by using CPD, but it's 75% of about $8/month compared to, say, a Walmart pharmacy. The real affordability problems are in patent-pending (brand name) drugs for which there are no generic alternatives. I know you like CNBC:

Canada is not a small country, I found the wait times are real, but I found if you really need care, you get it in a timely manner, contrary to much very biased information. Also, US medical consumes four trillion dollars or twenty percent of our GDP, INSANE. I have found many of our so-called professionals are anything but. I recently found one to be totally incompetent and either a liar or doesn't know how to read even the basics. Sadly, many now go into medical for money and not dedication to a craft. I have top industrial, and systems engineers say medical has the most inefficient, wasteful systems and organizational of any area they have worked in. They stated many so called medical professionals have the "God Complex" and don't even think they should be questioned. US medical is a mess and this is beyond dispute. Much of medical could even be done by technicians and many forms of current technology could vastly improve quality and costs, but the medical ecosystem in this country can only be rated as an expensive failure destroying the country. Most empires collapse from the inside and US medical will play a significant part in this. I have no doubt the strategic use of current technologies could vastly lower costs and improve quality. Also France and Italy are major countries and both rank twenty plus notches than the failing, expensive wasteful US system.
 
Have to be honest putting a chip in everything is good for business , but is it necessary?

Do I need to know what my kettle and toaster are doing when I am at work?
Yeah, but consumer gadgets are not the money engines for semi, those chips are jellybeans. The more valuable devices are in phones (which most people will not do without, and where refresh intervals stretch slowly, if at all), vehicles, enterprise and cloud, industrial. The question is more what those economic cycles will be.
 
Yeah, but consumer gadgets are not the money engines for semi, those chips are jellybeans. The more valuable devices are in phones (which most people will not do without, and where refresh intervals stretch slowly, if at all), vehicles, enterprise and cloud, industrial. The question is more what those economic cycles will be.

Firstly,phones and vehicles are consumer products. Secondly,all "enterprise and cloud, industrial" is just a segment in production phase,the ultimate user are still consumers.

If the final product is in low demand in consumer market,businesses will have to cut production,thus the demand in "enterprise and cloud, industrial" will decrease as well
 
Canada is not a small country, I found the wait times are real, but I found if you really need care, you get it in a timely manner, contrary to much very biased information. Also, US medical consumes four trillion dollars or twenty percent of our GDP, INSANE. I have found many of our so-called professionals are anything but. I recently found one to be totally incompetent and either a liar or doesn't know how to read even the basics. Sadly, many now go into medical for money and not dedication to a craft. I have top industrial, and systems engineers say medical has the most inefficient, wasteful systems and organizational of any area they have worked in. They stated many so called medical professionals have the "God Complex" and don't even think they should be questioned. US medical is a mess and this is beyond dispute. Much of medical could even be done by technicians and many forms of current technology could vastly improve quality and costs, but the medical ecosystem in this country can only be rated as an expensive failure destroying the country. Most empires collapse from the inside and US medical will play a significant part in this. I have no doubt the strategic use of current technologies could vastly lower costs and improve quality. Also France and Italy are major countries and both rank twenty plus notches than the failing, expensive wasteful US system.
When you’re in a hole, stop digging.
 
PCs and phones are mature and some in the financial community are saying the semi market is not the place to be. These analysts are short sighted and don't see the increasing penetration of semis into almost everything we touch. Intelligence is in the early stages of integrating into almost everything from almost every form of transportation, automation of everything, and platforms displacing much of the work in the professions. Semis main strength is being able to leverage almost everything they touch, and resources used. Platforms of all types, 3D printing, advanced manufacturing processes and everything becoming connected are all in their early stages. On top of this is the increasing speed of obsolescence of everything at an ever-increasing rate. Any shrink in demand will be temporary as when a market slows. the players will look for alternatives and there is an almost infinite number of immature markets that will become dominant players in their respective fields. At most any dip will just be a speed bump in the road forward. Many of the current analysts are chicken littles with limited vision and the sky is falling. Any thoughts, comments or additions sought and welcome.

Are we certain we won’t run up against an ultimate cost limit for new chip fabs and new tech though?

I agree that the analysts are missing the new market opportunities, and also unlike 20 years ago (Y2K), there’s so much more diversity in need for ICs that even if a few areas are depressed, there will be other areas to pick up the slack. However, if you push the horizon out further - it’s pretty clear we’re going to start running into affordability challenges to keep the engine running in an increasing number of technology areas.

Wafer costs are continuing to increase, and we’re seeing decreased performance/area scaling over time, implying some limits to the economics of the engine long term.

TL;DR - agree the analysts are short sighted. OTOH the 10 year view has some unprecedented cost risks to the growth of the industry. Kudos the engineers of course..
 
When you’re in a hole, stop digging.
You are in the hole, the US ranks 37th, even though much doctoring, pardon the pun, was done to change this to being in the top ten when a very simple non in-depth, shallow search is done. All this is done at the world's highest cost by far, with a system that is a maize and a total, disorganized mess.
 
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