A cyclical industry indeed stays cyclical - Memory-chip sector suffering one of its worst routs ever | Fortune

"The memory-chip sector, famous for its boom-and-bust cycles, had changed its ways. A combination of more disciplined management and new markets for its products — including 5G technology and cloud services — would ensure that companies delivered more predictable earnings.

And yet, less than a year after memory companies made such pronouncements, the $160 billion industry is suffering one of its worst routs ever. There’s a glut of the chips sitting in warehouses, customers are cutting orders, and product prices have plunged."

I'd recommend a reading of Chip Wars by Chris Miller, I think it might even make FTs business book of the year.

The first half is a history of the semi conductor industry which I found interesting but some may find a little boring but explains how we ended up where we are with pretty much ASML and TMSC dominating their various niches and the differnt architectures such as how ARM plays into it all. Touches on Intel, Samsung etc as well. Also a bit on the military uses.

The second half goes into the currenty industry/politcal dynamics. Takeaway is just how fragile the supply chain in is and how reliant the world is on Taiwan with TMSC. If China tried to take Taiwan good luck getting a new car.

The massive news this week by the US to ban some chips from China is big news - What do US curbs on selling microchips to China mean for the global economy? | China | The Guardian. It will be extremley hard for China to completly internalise the whole chain - the sheer amount of trillions it would take the author posits puts it even out of reach of the Chinese Government.

There is no doubt there will be more semiconducter chips in the future, this has been the case for decades and they will be more advanced with each iteration. The industry has always been very cylical though, is the recent increase in prices a strucutral change now? or just a temporary impact of COVID.