You are currently viewing SemiWiki as a guest which gives you limited access to the site. To view blog comments and experience other SemiWiki features you must be a registered member. Registration is fast, simple, and absolutely free so please, join our community today!
Semis/Nanotech to go noncyclical economically as the very nature and penetration and diversity of the entire nanotech ecosystem become an ubiquitous part of our economy and world. With semi/nanotechnologies penetrating deep into almost every sector and facet of our lives in combination with more and more products and services going to a subscription model, the semi/nanotech sector will become less and less cyclical. The "Great Acceleration" will play a part as the rate of change of technologies pick speed to the point the change is constant when the spread of technologies it encompasses becomes broad enough that there is always some new process, technology or way of delivery coming on constantly. Particular narrow areas will stay somewhat cyclical, but the cycles will be shorter and less drastic except if their is an earth shattering breakthrough of epic proportions and even here with the dramatic spread and depth of applications, even these will be smoothed out and averaged across the nanotech ecosystem. The subscription model extending its reach will allow the full utilization of technologies and resources in ever shorter time frames that will allow the accelerating depreciation so resources and technologies will allow ever shorter pay outs to allow the economic assimilation of the next generation to be adopted without undo economic damage. Semi/nanotechnologies impact and penetration has changed everything to the point that data is the new oil or steel and already surpasses both in impact. Just look at how solar, wind, batteries, semis making IC engines far more efficient, and new efficient electric motors are having an impact on the energy industry. As tech companies adapt and not only broaden not only their technologies, but its uses, we will start to see the boom and bust tie in more with the general economy and be less and less industry specific. More and more sections of our economy are becoming like utilities by going subscription based, from software, entertainment, phones to even cars. On top of all this is the declining cost of shipping thanks to container ships which has made the global market into single market, increasing the size and scale of a products market considerably. The economics of our entire economy is changing the economics of the semi/nanotech sector will change with it. This sector will start to follow the economy in general versus its own cycle and this will only become more so as it becomes more integrated into every corner of the world economy. With much of the world still trailing it penetration of the integration of the semi/nanotech sector the bias over the longer term will be faster than the old economy as a whole.
Comments, ideas and thoughts on this solicited and wanted
I think the root of the cycles is the long time scales to develop the chips then the long time scales to develop the uses, multiplied by fierce growth of anything that succeeds. This just creates a feedback loop enclosing -1 with gain, so it jumps from rail to rail. The clearest example is DRAM. Investing in fabs takes a couple of years, they do that when they have money, the high prices strangle usage, so factories come online just as the market learns to cut back, and then prices race to the bottom, investment stalls, new uses bloom, pices head up...
The only way to cure this is to shorten cycles. It can help if capacity investment is fairly continuous as it seems to be more stable with logic around TSMC and others who have a large number of products which even out the cycles. Except for phones, where the market shows signs of boredom. If the saturated phone SOC market starts to look like DRAM where cycles of price and demand get out of phase, look out.
Tanj, Tech's rapid change is literally changing the economics and behavior of the market. The resale of reconditioned iPhones is an ideal example. People are now buying phones on a subscription basis, keeping demand for the high end up. The same is true of semi equipment when Morris Chang talks about taking technology from the leading edge and using it in older fabs. This makes the case for the bleeding edge by extending not only the economic life allowing everyone to constantly advance the technology they can work with. It also dramatically lowers the cost of purchasing new technology. Subscription services are growing at a rapid clip as evidenced by the cover of the new Barron's.
This will not only keep up demand for the leading edge, but make the whole economic picture by allowing everyone to advance at a faster clip in a cycle that will start to feed on itself to everyone's benefit. Even some cars are going to a subscription model (Caddilac and Porche among others). Reconditioning and subscription models are going to change our entire economic structure, just like Uber, Lyft, Airbnb, Apple and many of the major phone carriers. We are going to see fundamental changes to our economy as the "Great Acceleration changes even the economic structures the world economy is based on at an ever accelerating rate.
An example on the financial channel this morning, coke is coming out with a sports drink machine that you customize electrolytes, sugar, salt, flavoring and a whole host of options on a screen and a water bottle with a chip in it that sets up the machine for you custom options automatically. This is just one more use of a variety of semiconductors expanding into new markets. Note TSM just reported 6% growth in monthly sales.
