Part 1 of this post pointed out the elevation of semiconductors from a thing to a resource as important as any other commodity. Treating semiconductors like any other Just-In-Time part turned out to be a strategic misstep that has disrupted the world’s industry.
The results of these relationships are less apparent and will cause major upsets to governments, investors, and enterprises:
1) Inventory gluts will hang overproduction of goods and depress pricing (producers have announced USD $ Billions of extra inventory to be sold down) [financial and cashflow impacts in a high inflationary interval] [resilience and sustainability in a cyclic market]
2) Accounting changes at major USA hyper-Cloud service providers (AWS, Microsoft as leaders) to extend the useful life of cloud infrastructure and compute assets will change hardware refresh profiles and will deploy additional custom-designed semiconductors [asset costs affecting prices and depreciation/investment flows]
3) Next generations of hardware and software will change economies at scale and total cost of ownership disconnecting hyper-Clouds and enterprise/individual platforms (scale up and out costs with hyper-Clouds disconnected from platform, security, resilience, and asset costs for enterprises/individuals) [concentration of hyper-scale providers margins versus enterprise/individual expectations and investments under budget constraints]
4) Investors and governments will be disappointed in the delayed timelines as semiconductor enterprises slowdown full production of new facilities to match market conditions (measured in years) [capital priorities competing with energy transitions, healthcare, and public infrastructure]
5) Enterprise investment in Big Data/AI/Data Science projects will result in a conflict between assumptions of cheaper processing and the reality of larger and larger problem scopes (dependent on expensive talent resources) [office workforce automation, upskilling of talent, industrial organization] (compare to pharma and energy industries use of isolated costs and capital)
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