Semi's sure have huge seasonality - BIG dip every 3 to 5 years apart.
I think you mean cyclicality - that is ..... boom periods, followed by excess capital spending, followed by excess supply and collapsing prices, followed by market absorption of the supply until OH NO it's now too little and we again got a boom period. Repeat.
This usually happens in DRAM and NAND memory, since they are subject to the capital spending increasing production capacity issue more than most semis. Now that the world is down to 3 DRAM makers, that market is much more profitable and the remaining players do not try to increase supply as much as they used, instead they try to make profits. NAND has 6 global players, and still goes through boom - bust periods (right now it is emerging from a bust, NAND should do well for the next few quarters).
TSMC being the only global company able to make leading edge foundry eliminates the boom - bust in foundry because no foundry makes "too much" leading edge capacity in order to kill off competitors. Instead, TSMC makes what amount it thinks appropriate, and it all sells out in 2-4 minutes.
So the cyclicality in the other segments of semis (other than memory and foundry) is driven by supply chain cycles - distributors order too many PCs or cell phones, and they don't sell, and so that causes the cycle. Or economic changes, everything slows down, so semis slow down with the economy.
AI of course doesn't slow down because every big tech boy is spending more and more doing God knows what trying to artificially do something none of us understand (keep us on Facebook longer? determine in advance whether we want to hold the onion on our Big Mac?).
The interesting thing about the past year is that the different segments of semis (analog, auto, industrial, consumer, AI, datacenter) have all been at different stages of the normal "cycle" for different reasons. For example, I'd say right now
-PCs are exploding higher compared to H1 2025
-Autos have bottomed, but are not picking up anything like one is used to from previous semi cycles.
-Industrial is in the "move higher from the bottom (last Xmas)" part of the cycle, but the tariff confusion is causing the uplift to be less violent than history would indicate.
-AI has been exploding higher for about three years, some think it's near the peak, but they're just guessing
-Cell phones, I got no idea
-HBM memory has been exploding higher for two years, and shows no signs of slowing (it's moving with AI)
-DRAM is a steady profitable grower, not even very cyclical
-NAND memory is finally moving off the bottom and the next 2-4 quarters should be pretty good for NAND
In total, I would say most segments are moving up, so the key forecast is when a segment (or perhaps the entire industry) slows down. |
