Why is semiconductor market cyclical

All rights reserved. Quartz Feldspar Redirects. The Cyclical Nature of the Semiconductor Industry Monday February 10, The semiconductor industry is famous for being a cyclical industry, due to the relatively short lifespan of semiconductor items, where technology becomes obsolete quickly when new and faster applications are developed.

Semiconductor Industry Swings EE Times was a difficult year for the semiconductor industry, especially after years of buoyant demand growth.

These companies benefit hugely from worldwide industry growth and clients that are expanding their own manufacturing capacity, generating a record, multiyear order book for these sophisticated equipment manufacturers.

There is an array of semiconductor manufacturers. US multinational technology firm Nvidia is any interesting example with a focus on the 3D graphics, and on the data centre and cryptocurrency industries. Nvidia can in some way be seen as the Tesla of the semiconductor industry, often ahead of others technologically. The dispute with Beijing highlights how reliant global chip production is on a small number of mainly-Western, Taiwanese and South Korean producers and their technologies, and how entrenched the established order is.

There are many exciting opportunities in the sector: in our concentrated 29 stock portfolio with a strategic long-term orientation, we have to be as ruthless in our selection as we are diligent.

With global technological developments probably less than halfway through a revolutionary multiyear growth cycle, our view is that there is still plenty for strategic investors to go for. Would you like to comment on this article or view other readers' comments? Subscribe Sign In. Markets Data. Featured Oil poised to end the week lower. JSE eyes record high, rand steady after an eventful week.

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Featured Absa dumps Sipho Pityana as lead independent director. Japan and South Korean companies produce the majority of wafers. The U. Over the last few years, both countries have relied on each other as China is highly dependent on U. Changing Trends in the U. Chip manufacturing For years, the U.

However, the country is losing ground from a chip manufacturing standpoint. Semiconductor manufacturing is critical to maintaining technical leadership in terms of supply chain issues and from an economic perspective. According to the U. Some key trends include: The U. Promising developments for the U. Some of the notable developments in this space include the following: The U.

Intel has formed a new commercial entity for developing chiplet-based designs. These chiplets are likely to integrate dies in an advanced package and are likely to remain competitive.

Federal Incentives are likely to turn the tide Federal incentives are a key for in-house manufacturing as the cost to build and operate a fab in the U. Exhibit 5. Some of the incentives in this sector include: The recent bill of the U.