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The semiconductor bust – still coming?

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Re: The semiconductor bust – still coming?

#41

Post by snovv_crash »

MuffinFlavored wrote: post #23
swamp40 wrote: post #8

Hard to listen to someone talk about semiconductor/IC supply without mentioning China's cornering and hording of the semiconductor/IC market. There are bottlenecks in all electronic assemblies. Processors, crystals, specialized chips, etc. Things you just can't substitute. China identified many bottlenecks and strategically bought the entire supply. For thousands of items. Hundreds of billions of dollars worth of ele…

instead of $2.50 -> $100, why don't they make it like... $2.50 -> $5 and actually sell them all?

Because the demand isn't flexible enough to change parts, so they will pay it anyways.

Re: The semiconductor bust – still coming?

#42

Post by alimov »

CamperBob2 wrote: post #33
alimov wrote: post #11

Earlier quoted context omitted.

> “…strategically bought…” That’s a key phrase here. Did others do the same? If they didn’t then why not? And if they did, then they are surely profiting from the shortage as well. I wonder how long this can go on for… I mean if you can make less of something, and make 2x or more (in your example) profit from it then I’d guess some businesses might not want this kind of arrangement to end.

Did others do the same? Yes, and that's part of the problem. It's not just hoarding by Chinese brokers. There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands... just as many/most of us had a garage full of toilet paper last year that we are only now working our way through. Our factory rep says it's getting h…

> “There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands...”

And I’m guessing nobody wants to re-sell (at somewhat regular prices) or there is no mechanism to return excess stock of goods to a distributor that can then mark the price up a little to make it worth their time? I don’t know how this works, so please excuse the kinds of questions I’m asking.

Re: The semiconductor bust – still coming?

#43

Post by snovv_crash »

CamperBob2 wrote: post #33
alimov wrote: post #11

Earlier quoted context omitted.

> “…strategically bought…” That’s a key phrase here. Did others do the same? If they didn’t then why not? And if they did, then they are surely profiting from the shortage as well. I wonder how long this can go on for… I mean if you can make less of something, and make 2x or more (in your example) profit from it then I’d guess some businesses might not want this kind of arrangement to end.

Did others do the same? Yes, and that's part of the problem. It's not just hoarding by Chinese brokers. There is a massive, unknown, and unknowable shadow inventory of parts sitting on shelves at EMS facilities right now, far in excess of near-term production demands... just as many/most of us had a garage full of toilet paper last year that we are only now working our way through. Our factory rep says it's getting h…

Everyone I know in the business went from doing JIT parts acquisition to making sure they have a year worth of components, for everything. It's the toilet paper issue again, only this time it's industrial manufacturers.

The correct way to solve this would be to set up a futures market on the parts. This way people who really need certain quantities at certain dates can still access them, and hoarders can put a price on the stock they're sitting on.

Re: The semiconductor bust – still coming?

#44

Post by strogonoff »

barry-cotter wrote: post #35
strogonoff wrote: post #24

Earlier quoted context omitted.

Free market is a great idea, but it’s fragile in that it requires good faith in order to be fair and it’s not immune to tragedies of the commons. Hoarding or panic buying is an example of bad-faith behavior. Panic buying hurts buyers without means to hoard. With groceries, it might mean their children going hungry after a rich guy empties out local store (not everywhere a store manager can flat out refuse to sell). W…

> Hoarding or panic buying is an example of bad-faith behavior. Panic buying hurts buyers without means to hoard. Yeah, if you’re not very profitable you won’t be able to afford it. You’re not the best use of the good in question, i.e. the one that makes the most money. Cornering a market in anything is incredibly hard. Doing it motivates others to find substitutes or secure supply. That’s capitalism. If you don’t wa…

Capitalism (the way I understand it, free market and all) does not imply participating in bad faith. The fact that in the West there are bad-faith players that take advantage of the system does not mean it is normal. See the grocery example. It works for everybody, suppliers, sellers and consumers, as long as no one abuses the system. However, if one does want to go that route, it’s achievable; in a small market a single participant can ruin things for everyone, and in a larger one multiple participants can do the same by acting in accord.

It looks like capitalism is sometimes taken to mean an extreme zero-sum form of free market where everybody is out to win at the expense of others. Proponents of centralized dispensation by an all-powerful government often bring this up, but is that the mainstream meaning of the term?

For the record, I don’t think the requirement of market participants to act in good faith is a bug. I believe the existence of malicious actors is not fundamentally inevitable, and mutual trust is empowering.

Re: The semiconductor bust – still coming?

#45

Post by johnny22 »

silisili wrote: post #29
whichquestion wrote: post #27

Earlier quoted context omitted.

The US Government did precisely that with the CHIPS Act (2021). It allocated something like $40B for US manufacturing of semiconductors and $10B for R&D [1]. Intel is planning a megafab in Ohio that is estimated will cost $100B when it’s completed. The State of Ohio is giving $2B for the first two plants that are estimated to cost $20B [2]. Chip companies are making new fabs in the US and the US gov is helping to spo…

Excellent, thank you! I suppose I should have researched more recently before commenting. The fact that this doesn't make front page national news is mind boggling to me.

didn't it? I coulda swore i saw it on nbc news on tv, and i know i saw it in the washington post.

Re: The semiconductor bust – still coming?

#46

Post by Taniwha »

sidewndr46 wrote: post #9
swamp40 wrote: post #8

Hard to listen to someone talk about semiconductor/IC supply without mentioning China's cornering and hording of the semiconductor/IC market. There are bottlenecks in all electronic assemblies. Processors, crystals, specialized chips, etc. Things you just can't substitute. China identified many bottlenecks and strategically bought the entire supply. For thousands of items. Hundreds of billions of dollars worth of ele…

I'm not trying to advocate a pro-China stance here, but is there any business that is done in China that isn't in part sponsored by the government? One book I read even told the story of a grey market manufacturing operation that had to go legit not because of a government "bust" but because the local figurehead wanted the output of the factory included in his productivity figures.

Of course there is - I've gone to Shenzhen several times and hired people to build my kickstarter - including supplying of most of the parts, building the PCBs, assembling the boards etc - the only time I ever interacted with the government was the guy behind the immigration desk on the way in and out again (I have an APEC business card so I don't need to apply for visas, just show up at the door and show it)

Re: The semiconductor bust – still coming?

#47

Post by Falkon1313 »

haberman wrote: post #5

I have no expertise in this, and can't even claim to have followed the entire article or video. But the PS5 has been out of stock ever since its release in Nov 2020. That is an astonishing fact to me. I can't think of anything like this in my lifetime. The flagship product of a multinational corporation has been sold out for 18 months. Empty shelves where a product should be. It's just one isolated data point, but it…

Similar for graphics cards. For about a year there just weren't any. One of the manufacturers set up a waiting list to sell direct to customers, but it was still taking a year on the waiting list for people to get them and they had to shut down the list. Even now two years into it, the low quantities available retail are still selling at double or triple MSRP.

I wonder how many years the companies can keep running without producing or selling much. Also what the situation is with employees. Here in the U.S. a company would be quick to start layoffs if there's no revenue and no work to do, and after years passed it wouldn't be easy to quickly restaff and rebuild capacity.

Re: The semiconductor bust – still coming?

#48

Post by throwaway4good »

"In TSMC's recent Q1 2022 earnings, 41% of their revenues came from High Performance Computing or HPC - where they put their cloud revenues. Just two years ago it used to be 30%.

They also noted that HPC grew 26% quarter over quarter - far faster than almost every other category other than automotive, which is a far smaller part of the overall business."

AFAIK TSMC list crypto (that is various chips made specifically for proof of work mining) in the HPC category.

It is not unlikely that market will correct violently at one point.

Plus on the fab/design side there is a lot of stuff happening in mainland China and it one point that is going to hit the market.

Re: The semiconductor bust – still coming?

#49

Post by unwind »

I was better at Web Stuff, I would love to have one of those single-purpose sites that tried to show at a glance the status of the semiconductor industry.

I mean everybody knows it's really bad, but it's so hard to get a feel for and to see if anything is changing, unless (I guess) you're seriously In The Trenches doing e.g. component sourcing for some boards.

I imagine something like https://dowehavechipsyet.com/ (made-up domain) with current inventory across western and eastern suppliers, price with price trends, manufacturer's stated wait time for orders, and so on. Like an aid in quickly seeing the state of the industry, perhaps for uh I don't know, either some varied selection of components (micros, transistors, power parts, etc) or deeper with perhaps 5-10 chips from each category.

Does that exist and nobody told me? :)

Re: The semiconductor bust – still coming?

#50

Post by carom »

Falkon1313 wrote: post #47
haberman wrote: post #5

I have no expertise in this, and can't even claim to have followed the entire article or video. But the PS5 has been out of stock ever since its release in Nov 2020. That is an astonishing fact to me. I can't think of anything like this in my lifetime. The flagship product of a multinational corporation has been sold out for 18 months. Empty shelves where a product should be. It's just one isolated data point, but it…

Similar for graphics cards. For about a year there just weren't any. One of the manufacturers set up a waiting list to sell direct to customers, but it was still taking a year on the waiting list for people to get them and they had to shut down the list. Even now two years into it, the low quantities available retail are still selling at double or triple MSRP. I wonder how many years the companies can keep running wi…

>Even now two years into it, the low quantities available retail are still selling at double or triple MSRP.

BestBuy had fine stock when I went in a week ago. Next gen is dropping soonish so miners are holding off.

I got my 3090 from a miner who was hooked in to the scalpers. They weren't so over priced, a lot of people just look at the cheapest possible 3090 and compare to that, not realizing there are different levels.

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