EkaLore releases our analysis and notes on Alien Invaders into marketspaces. In this release, we revisit the implications of the global semiconductor enterprise market space changes in our challenging times.
Challenges at the semiconductor manufacturer level of enterprises are causing major changes in business investment, business models, and talent demands at the same time as challenges in global monetary relationships (inflation, monies), demand (Covid-19), and previous impacts (supply chain/logistics) are changing rapidly.
The challenges will directly change enterprise decisions for agility, resilience, and long-term sustainability of enterprises colossal and tiny.
Major semiconductor manufacturers have announced, to the financial and business/government communities, major disappointments to their financial results planned for late 2022 and 2023 plans. Intel, AMD, Micron Technology, Samsung, Kioxia (Toshiba), and nVidia have all changed their forecasts for production, sales, and margins. TSMC appears to be better positioned as major fabless customers are in transition across product generations. Global Foundries announces results in early November. Chinese imports of semiconductors are subject to foreign relations disagreements with the USA and EU. Across all of these enterprises, the global demand is lower (commodity products like memory and storage memory) and more complicated (vehicle supply chains).
These announcements are at the same time as semiconductor enterprises seek government aid and subsidies for new plant and production facilities in global locations. Governments across the planet are considering or have extended financial help in the EU (Italy, Germany), USA (CHIPS Act), Japan (Hiroshima plant), China (Made in China 2025), India (Make in India), and elsewhere. Semiconductor manufacturers are announcing gigantic investments (up to USD$100B over years) in some geographies to encourage government support. The cyclic investment in production plants will take years to bring production to high levels.
The complex relationships between semiconductors and economic domestic products were less understood at the start of the Covid-19 period. Semiconductors are now seen as just as foundational to the economy as energy production, food production, health/education, and consumer consumption.
Disruptions in production drew traditional reactions to sudden changes in demand (automobiles in particular) – cancelling orders and reducing deliveries – to realizations of changes in demand (cloud, remote work) – surging orders for specific end-user equipment and communications – to realizations of consumer demand changes (TV sets and entertainment). The response from the Semiconductor industry produced far greater effects than the industry anticipated.
Semiconductor manufacturers responded by operating production facilities well above traditional utilization levels (above 105% of plan in some plants) while holding prices high for high demands. The cycle of production supply/demand has caught up for major products (CPU, memory, commodity chipsets) while still behind in specific areas (vehicles, mixed-signal, power). Added demands for surges in highly specialized products came from global conflict zones. The marketplace and landscape changes occurred at the same time as disruptions to supply/demand cycles.
Look for When the Big Dogs are Hungry part 2 at www.ekalore.com/alien-invaders
Read other posts from our team at www.ekalore.com/blog-1
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