This document summarizes a presentation on the economics of fabless semiconductor companies and global onshoring initiatives. It discusses the perfect storm of under supply and over demand currently facing the semiconductor industry. It was caused by years of underinvestment in capacity combined with a sudden surge in demand during COVID. This has led to severe shortages across the industry. While the current boom is strong, the document warns that the natural cyclical nature of the industry means a correcting crash is inevitable at some point, though the timing is uncertain.
1) The document discusses the case for actively managed equity funds over index funds, noting that while index funds have lower fees, they guarantee underperformance versus the benchmark. It also notes that while industry statistics show most active managers underperforming, choosing the right manager who can remain nimble is key.
2) The document provides an outlook on global markets, noting recent weakness in growth data, a weaker dollar, and fluctuating commodity prices. It analyses relative valuations between markets like South Africa which appear expensive versus bonds, and other regions.
3) The author expresses a cautious outlook, remaining skeptical of resources given Chinese growth, trimming overvalued industrial and financial holdings, and holding higher than usual cash balances
Current Market Intelligence - Copy Edited 090426 (DBM-Court Final)Court Bradley
This document discusses the current state of the commercial real estate market and outlines several challenges facing investors, including:
1) Declining cash flows from weakening tenants and falling rental rates. Unemployment has risen significantly which is weakening many tenants' ability to pay rent.
2) Changes to tax benefits such as carried interest that could reduce incentives for investment. Proposed changes may decrease development activity.
3) Rising capitalization rates and falling property values, pointing to continuing price erosion. Distressed assets are increasing and further pulling down surrounding property values.
4) Stricter lending standards with higher down payments required and interest-only loans no longer available are limiting leverage capabilities. This constraints investment activity
The document summarizes business challenges during and after the global economic crisis from 2008-2009. It discusses how unsustainable economic growth, reckless financial institutions, and opaque financial products led to the crisis. It outlines impacts like declining consumer confidence and economic downturn in Turkey. Microsoft's response focused on cost control, positioning for future growth. The recovery was expected to be a long "U-shaped" process, with stimulus plans potentially boosting IT spending but overall growth remaining slow after 2011. The "new normal" for Microsoft retail in Turkey involved maintaining strategy, focusing on market share and retail execution to acquire new channels and customers.
This document discusses the DSP India T.I.G.E.R. (The Infrastructure Growth and Economic Reforms) Fund, which focuses on capturing growth potential from India's economic reforms and infrastructure development. It highlights several positive factors that indicate the investment cycle in India has bottomed out and is poised for revival, such as improved bank balance sheets, rising tax revenues, capacity utilization increasing, and new project announcements picking up. Government policies like production-linked incentive schemes and the largest ever infrastructure budget allocation are also expected to drive a pickup in private sector capex. Various sectors like manufacturing, real estate, renewable energy are discussed as poised to benefit from this investment and infrastructure growth cycle.
Deltec Outlook - China - February 2015David Frazer
The document provides an analysis of economic conditions in China in early 2015. It finds that leading economic indicators point to significantly weaker growth, with domestic demand remaining weak outside of government stimulus spending. Exports may recover due to stronger US demand but domestic and fixed asset investment are likely to remain sluggish. Significant risks exist in the financial system from hot money outflows, rising non-performing loans, and accelerating withdrawals from the conventional banking system. Long-term challenges to transforming the economy remain while recent stimulus measures may have limited effectiveness in the current environment.
The document summarizes the outlook and strategy of the Global Commodity Systematic Program (GCS) managed by Global Advisors. GCS uses a rules-based, non-discretionary approach to identify and manage trends across 35 commodity markets. It expects profitable opportunities over the next few years due to factors such as the devaluation of paper currencies, continued demand growth in emerging markets like China, a supply shock from reduced commodity investment, and increasing investment in commodities from stock market investors. Charts are presented supporting these views, and it is argued that if commodity markets exhibit strong trends, the GCS program will be able to generate strong returns managing those trends.
Vivek Tulpule Analyst Roundtable April 2010Rio Tinto plc
- The document is a presentation by Rio Tinto's chief economist from April 2010 discussing global economic trends and outlooks, with a focus on China.
- It notes that consensus projections show global growth accelerating in 2010, led by developing economies like China, after contracting in 2009.
- Data on China's economy in 2008-2010 shows strong rebounds in industrial production, exports, and retail sales after the financial crisis, supported by fiscal stimulus and abundant liquidity.
1) The document discusses the case for actively managed equity funds over index funds, noting that while index funds have lower fees, they guarantee underperformance versus the benchmark. It also notes that while industry statistics show most active managers underperforming, choosing the right manager who can remain nimble is key.
2) The document provides an outlook on global markets, noting recent weakness in growth data, a weaker dollar, and fluctuating commodity prices. It analyses relative valuations between markets like South Africa which appear expensive versus bonds, and other regions.
3) The author expresses a cautious outlook, remaining skeptical of resources given Chinese growth, trimming overvalued industrial and financial holdings, and holding higher than usual cash balances
Current Market Intelligence - Copy Edited 090426 (DBM-Court Final)Court Bradley
This document discusses the current state of the commercial real estate market and outlines several challenges facing investors, including:
1) Declining cash flows from weakening tenants and falling rental rates. Unemployment has risen significantly which is weakening many tenants' ability to pay rent.
2) Changes to tax benefits such as carried interest that could reduce incentives for investment. Proposed changes may decrease development activity.
3) Rising capitalization rates and falling property values, pointing to continuing price erosion. Distressed assets are increasing and further pulling down surrounding property values.
4) Stricter lending standards with higher down payments required and interest-only loans no longer available are limiting leverage capabilities. This constraints investment activity
The document summarizes business challenges during and after the global economic crisis from 2008-2009. It discusses how unsustainable economic growth, reckless financial institutions, and opaque financial products led to the crisis. It outlines impacts like declining consumer confidence and economic downturn in Turkey. Microsoft's response focused on cost control, positioning for future growth. The recovery was expected to be a long "U-shaped" process, with stimulus plans potentially boosting IT spending but overall growth remaining slow after 2011. The "new normal" for Microsoft retail in Turkey involved maintaining strategy, focusing on market share and retail execution to acquire new channels and customers.
This document discusses the DSP India T.I.G.E.R. (The Infrastructure Growth and Economic Reforms) Fund, which focuses on capturing growth potential from India's economic reforms and infrastructure development. It highlights several positive factors that indicate the investment cycle in India has bottomed out and is poised for revival, such as improved bank balance sheets, rising tax revenues, capacity utilization increasing, and new project announcements picking up. Government policies like production-linked incentive schemes and the largest ever infrastructure budget allocation are also expected to drive a pickup in private sector capex. Various sectors like manufacturing, real estate, renewable energy are discussed as poised to benefit from this investment and infrastructure growth cycle.
Deltec Outlook - China - February 2015David Frazer
The document provides an analysis of economic conditions in China in early 2015. It finds that leading economic indicators point to significantly weaker growth, with domestic demand remaining weak outside of government stimulus spending. Exports may recover due to stronger US demand but domestic and fixed asset investment are likely to remain sluggish. Significant risks exist in the financial system from hot money outflows, rising non-performing loans, and accelerating withdrawals from the conventional banking system. Long-term challenges to transforming the economy remain while recent stimulus measures may have limited effectiveness in the current environment.
The document summarizes the outlook and strategy of the Global Commodity Systematic Program (GCS) managed by Global Advisors. GCS uses a rules-based, non-discretionary approach to identify and manage trends across 35 commodity markets. It expects profitable opportunities over the next few years due to factors such as the devaluation of paper currencies, continued demand growth in emerging markets like China, a supply shock from reduced commodity investment, and increasing investment in commodities from stock market investors. Charts are presented supporting these views, and it is argued that if commodity markets exhibit strong trends, the GCS program will be able to generate strong returns managing those trends.
Vivek Tulpule Analyst Roundtable April 2010Rio Tinto plc
- The document is a presentation by Rio Tinto's chief economist from April 2010 discussing global economic trends and outlooks, with a focus on China.
- It notes that consensus projections show global growth accelerating in 2010, led by developing economies like China, after contracting in 2009.
- Data on China's economy in 2008-2010 shows strong rebounds in industrial production, exports, and retail sales after the financial crisis, supported by fiscal stimulus and abundant liquidity.
2014.11.28 - NAEC Group Meeting_Adrian Blundell-WignallOECD_NAEC
The document discusses several issues related to finance and the economy. It notes that financial deregulation and innovation led to the 2008 liquidity crisis due to complex derivatives and relationships between counterparties. Since then, derivatives have shifted from banks to shadow banks. There has also been an emerging market bubble in corporate credit as investors seek yield. The document raises concerns about liquidity risks if interest rates rise or demand slows, given the shift away from banks as liquidity providers. It argues that new approaches are needed to encourage long-term, sustainable investment by non-banks.
Skirting the Abyss: From Economic Downturn to Financial Crisis to Long-term M...Llinlithgow Associates
We came right up to the edge of the economic abyss after a year of an accelerating economic downturn and have managed to avoid it but are not out of the woods yet. The risks of a double-dip are growing but the likelihood of a weak recovery and poor job creation is high. A key problem is and was the financial crisis and credit market collapse which has created major lingering problems that will be with us for years. Beyond that a two-decade over-accumulation of debt, drastic declines in Savings and under-Investment have created long-term problems for getting back to sustainable long-term growth. Here we survey the current state of the economy, wade thru the details of the Financial crisis, especially the role of Synthetic Structured Debt and the business performance of the Finance Industry. Then we roll forward to examine the long-term damages created, how we need reduce private debt and what our prospects for reduced long-term growth are. Or, given the decisions to invest in our future and address broader policy problems, how we can return to a path of longer-term high growth and prosperity.
Anchor Capital is a South African investment management firm founded in 2011 with over R20 billion in assets under management. It has a local and offshore investment team of 20 professionals and offices in several South African cities as well as London. The document discusses investment opportunities within US banks and high yield bonds, the Chinese economy and consumer, and global asset allocation positioning. It also profiles two of Anchor Capital's fund managers, David Gibb and Peter Little.
Volterra Semiconductor held its 2012 analyst day presentation, which included forward-looking statements and non-GAAP financial measures. The agenda covered company overviews, financial results, and the server/storage, networking/telecom, notebook, and new product markets. Volterra reiterated its Q3 guidance and expects continued revenue and profit growth driven by opportunities in existing and new markets.
BofA - Commodities Outlook - As of 3Q21.JooMarcus10
This document provides an outlook on commodities markets for the third quarter of 2021 from Citi's global commodities research team. Some of the key points made in the outlook include:
- Commodity prices have risen robustly in 2021 but this is unlikely to signal a new multi-year commodities "supercycle." While demand is recovering strongly from the pandemic, long-term trends point to lower commodity intensity of global GDP.
- Energy prices like oil and gas are expected to peak in 2021 and then decline in the coming years due to increasing supplies and policies promoting decarbonization that reduce demand growth.
- Bulk commodity prices for iron ore, coal, etc. will likely be the first to
President and chief investment officer, Robert Lutts, of Cabot Wealth Management presents a luncheon keynote where he discusses a bull market, four signs of trouble ahead, and Cabot's top three investment themes.
President and chief investment officer, Robert Lutts, of Cabot Wealth Management presents a luncheon keynote where he discusses a bull market, four signs of trouble ahead in the economy, and Cabot's top three investment themes.
This document provides a quarterly report for Western Reserve Hedged Equity (WRHE) fund for the second quarter of 2005. It summarizes the fund's performance for various periods and compares it to market benchmarks. It also discusses the fund's investment strategy and outlook, including being bullish on growth stocks and bearish on "conventional value" stocks that they believe have formed a bubble with overvalued valuations. The document analyzes various companies and sectors that the fund has investments in, both long and short positions.
META SYSTEM - Opportunities for Middle East & Indian CoAjay Gohil
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This document discusses emerging markets and why China is different from other emerging economies. It notes that while BRIC is now BRI due to China's decoupling, other emerging markets like Brazil, Russia, and India still face challenges from high current account deficits and energy security issues. The document argues that China has created advantages for itself through massive infrastructure development and becoming a global manufacturing and consumption center. It asserts that China appears to have the right economic parameters with moderate GDP growth, inflation, and a current account surplus. The document suggests that financial services companies should seek alternative investments and innovative instruments to generate better returns as opportunities arise globally.
The document summarizes the major global economic problems since 2007, including severe financial crises, weak GDP and industrial production growth, high unemployment, and volatility in financial markets. It analyzes factors like long-term business cycles, shifts in global economic power, and misguided policies that have exacerbated the problems. Looking ahead, it predicts another global recession by 2014/2015 led by a recession in the US, but more rapid growth in developing countries in the long run.
How Could Arab Oil Exporters Respond to the New Global Oil Order: Graduate t...Economic Research Forum
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How Could Arab Oil Exporters Respond to the New Global Oil Order: Graduate to Rule-based Macroeconomic Institutions
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www.erf.org.eg
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2) A global macro strategy bases holdings on overall economic and political views, using combinations of strategies across asset classes like currencies, interest rates, and stock indexes.
3) Factors like market cap, sectors, currencies, and macroeconomic data influence different equity indexes differently and studying these relationships is important for understanding market moves.
The document summarizes recent political, economic, and industry developments in Indonesia based on a survey. It finds that while the economy grew around 7% annually, issues remain such as falling government approval ratings, concerns around corruption, and challenges managing urban growth. It also analyzes trends in exports, monetary policy, stock markets, budgets, and the impacts of natural disasters like Mount Merapi's eruption.
The document discusses the U.S. budget situation and options for fiscal policy. It notes that while short-term deficits are not a major problem, medium-term deficits will likely require tax increases over the next decade and long-term deficits pose growing and unsustainable shortfalls. It outlines concerns about rising federal debt levels and fiscal problems in other countries as well. The document analyzes how the U.S. arrived at its current budget situation through gradual economic and policy changes as well as the Great Recession. It projects ongoing deficits and rising debt levels over the next decade under different policy scenarios and considers the long-term fiscal gap. The document discusses balancing recovery efforts with fiscal discipline in the medium and long-term.
The document discusses the U.S. budget situation and options for fiscal policy. It notes that while short-term deficits are not a major problem, medium-term deficits will likely require tax increases over the next decade and long-term deficits pose growing and unsustainable shortfalls. It outlines concerns about rising federal debt levels and fiscal problems in other countries as well. The document analyzes how the U.S. accumulated large budget deficits gradually and then suddenly due to economic changes, policy decisions, and the Great Recession. It projects ongoing large deficits and rising debt levels through 2020 under different policy scenarios and discusses the long-term fiscal challenges facing the country.
Overview of GLOBAL FINANCE CRISIS and impact with market. Impacts of the US Financial Crisis on Indian Economy. FINANCE CRISIS, Subprime Mortgage Crisis, US Financial Markets, US Unemployment and Stock Market Returns, Treasury Rates and Inflation,
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CHINA’S GEO-ECONOMIC OUTREACH IN CENTRAL ASIAN COUNTRIES AND FUTURE PROSPECTjpsjournal1
The rivalry between prominent international actors for dominance over Central Asia's hydrocarbon
reserves and the ancient silk trade route, along with China's diplomatic endeavours in the area, has been
referred to as the "New Great Game." This research centres on the power struggle, considering
geopolitical, geostrategic, and geoeconomic variables. Topics including trade, political hegemony, oil
politics, and conventional and nontraditional security are all explored and explained by the researcher.
Using Mackinder's Heartland, Spykman Rimland, and Hegemonic Stability theories, examines China's role
in Central Asia. This study adheres to the empirical epistemological method and has taken care of
objectivity. This study analyze primary and secondary research documents critically to elaborate role of
china’s geo economic outreach in central Asian countries and its future prospect. China is thriving in trade,
pipeline politics, and winning states, according to this study, thanks to important instruments like the
Shanghai Cooperation Organisation and the Belt and Road Economic Initiative. According to this study,
China is seeing significant success in commerce, pipeline politics, and gaining influence on other
governments. This success may be attributed to the effective utilisation of key tools such as the Shanghai
Cooperation Organisation and the Belt and Road Economic Initiative.
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2. **Synchronization**: Synchronization is crucial in TDM systems to ensure that the signals are correctly aligned with their respective time slots. Both the transmitter and receiver must be synchronized to avoid any overlap or loss of data. This synchronization is typically maintained by a clock signal that ensures time slots are accurately aligned.
3. **Frame Structure**: TDM data is organized into frames, where each frame consists of a set of time slots. Each frame is repeated at regular intervals, ensuring continuous transmission of data streams. The frame structure helps in managing the data streams and maintaining the synchronization between the transmitter and receiver.
4. **Multiplexer and Demultiplexer**: At the transmitting end, a multiplexer combines multiple input signals into a single composite signal by assigning each signal to a specific time slot. At the receiving end, a demultiplexer separates the composite signal back into individual signals based on their respective time slots.
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Traditionally, dealing with real-time data pipelines has involved significant overhead, even for straightforward tasks like data transformation or masking. However, in this talk, we’ll venture into the dynamic realm of WebAssembly (WASM) and discover how it can revolutionize the creation of stateless streaming pipelines within a Kafka (Redpanda) broker. These pipelines are adept at managing low-latency, high-data-volume scenarios.
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Manufacturing Process of molasses based distillery ppt.pptx
Economics of Fabless Semiconductor Companies -Malcolm Penn, Future Horizons.pdf
1. Slide 1
Economics of Fabless
Semiconductor Companies
& Global Onshoring Initiatives
IIOM – Newport – Nov 04, 2021
Malcolm Penn – Chairman & CEO, Future Horizons
2. Slide 2
About Future Horizons
(Google “Future Horizons” or “Malcolm Penn Semiconductors” For More Details)
◆ ONLY Analyst To Correctly Call 2018’s Double-Digit Upturn
◆ ONLY Analyst To Counsel ‘Stay Calm’ Advice Re 2020 Covid-19 Impact
◆ ONLY Analyst To Call Shortages & Strong Double-Digit Growth For 2021
Consistently Good Track Record, Second To None
1. Facts
◆ Economy (IMF)
◆ Unit Demand (WSTS)
◆ Fab Capacity (SEMI)
◆ ASPs (WSTS)
Four Key Influences
(Apocalypse Horsemen)
2. Sentiment
◆ Perception
◆ FUD
◆ Fashion
◆ Emotion
Hype Vs. Reality
(Sanity Check)
3. Experience
◆ 5+ Decades (From The First ICs)
◆ End User (Industrial & Telecoms)
◆ Business Development (DRAM & ASSP)
◆ Operations (Wafer Fab & Test)
-40%
-20%
0%
20%
40%
60%
80%
100%
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020F
Every Downturn Bar The First
(Unrivalled Hand’s On Knowledge)
Proven Research Methodology
◆ Longer That Any Other Analyst (& Most Industry Execs)
◆ Five Plus Decades Of Industry Experience (From The First Commercial IC)
Founded In 1989 … 32 Years In Operation
3. Slide 3
Agenda
◆ Semiconductors 101
➢ Characteristics / Driving Forces
◆ The Perfect Storm
➢ Under Supply / Over Demand
◆ Market Outlook
➢ Will Boom Turn To Bust
Part 1 – Economics Of Fabless
Semiconductor Companies
4. Slide 4
Agenda
◆ Semiconductors 101
➢ Characteristics / Driving Forces
◆ The Perfect Storm
➢ Under Supply / Over Demand
◆ Market Outlook
➢ Will Boom Turn To Bust
Part 1 – Economics Of Fabless
Semiconductor Companies
5. Slide 5
Making Sense Of The Industry ‘Tea Leaves’
FH
-40%
-20%
0%
20%
40%
60%
80%
100%
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020F
Key Driving Influences
◆ Technology Push (Moore’s Law / Science)
◆ Market Pull (Doing The Previously Impossible)
◆ Production (Supply / Demand)
◆ Economy (Greasing The Wheels)
Analytical Tools Used
◆ Economy (IMF) / SC Sales (WSTS) / CapEx &
Wafer Production (SEMI) plus Company Reports
& In-House Proprietary Database
◆ Not An Exact Science … There Are No
Predicting Formulas Or Models
◆ Jigsaw Puzzle With A Goodly Portion Of
Missing Pieced
◆ 50+ Years Of Industry Experience Clearly Helps
… So Too Does Some Common Sense!
6. Slide 6
Key Driving Influences – Impact & Role
1. Economy
Determines What Users Can Afford To Buy
(More Buoyant, Stronger The Demand)
2. Unit Demand
Defines What Users Actually Buy
(Plus / Minus Inventory Adjustments)
3. Capacity
Determines How Much Demand Can Be Met
(Under- Or Over-Supply)
4. ASPs
Sets The Price The Units Can Be Sold For
(Supply-Demand Plus Value Proposition)
(SC Apocalypse Horsemen)
Need To Track Current Status Vs. Underlying Trends
(It’s Rarely ‘Different This Time!’)
7. Slide 7
Key Driving Influences – Current Status
1. Economy
➢ Strong 2021 Bounce Back (+5.1%) Following
2020’s -4.4% Contraction
➢ Recovery Hampered By Shortages, Supply Line Imbalances
& Inflation Concerns
2. Unit Demand
➢ Shipments = Real Demand +/- Inventory & Leadtime
Adjustments plus Double Ordering / Line Purging
➢ Shipments Currently Running Well Above 8% Trend Line
3. Capacity
➢ Completely Sold Out, Following Years Of Under-Investment
➢ Modest 2020 CapEx Increase, On Stream Q4-21?
➢ More Robust 2021 Increase, On Stream Q3-22?
4. ASPs
➢ Recovery Lags Units By 12-Months (This Time Only 8)
➢ Long-Term Trend = 0% (Hostage To Moore’s Law)
(SC Apocalypse Horsemen)
All Four In Strong Unison, Hence The Current (14th) Market Boom!
8. Semiconductors 101 – Industry Cyclicality
Pig Cycle
*Source: M Penn Market Presentation - IEEE Boston 1975
Boom
Suppliers Overbooked
Customers Build Stocks
Double Ordering
Prices Stabilise
Pressure On Production
Delinquency
Slump
High Stocks
Cash Flow Problems
Customers Return Product
Prices Fall To Marginal Cost
Pressure On Production Costs
Long Term Orders Disappear
Market Impact*
Market Value Collapses
Market Value Surges
Shortages Triggered By
• Under Investment
• Increased Demand
Over Supply Triggered By
• Excess Investment
• Market Collapse
Supply/Demand Balance
Demand Fundamentals: Poor Visibility / Highly Volatile / Unreliable Forecasts
Supply Fundamentals: Long Production Cycle (4 Months)
Long Capacity Lead-Time (1-2 Years)
Nothing Has Changed In The Past 50 Years
9. Semiconductors 101 – Long New Capacity Lead Time
These Numbers Have Also Not Changed Either
(Next 4 Quarters Capacity Is Always Fixed In Stone)
PLUS … 2 Years To Design A New SoC IC
(Nowadays Sole Sourced … There Is No Plan B)
10. Slide 10
Agenda
◆ Semiconductors 101
➢ Characteristics / Driving Forces
◆ The Perfect Storm
➢ Under Supply / Over Demand
◆ Market Outlook
➢ Will Boom Turn To Bust
Part 1 – Economics Of Fabless
Semiconductor Companies
11. Slide 11
Perfect Storm Brewing … Decade Of Low Single Digit Growth
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Market Growth
Sub-Prime
Bust
Lehman
Collapse
Stop-Start Post Lehman
Global Economic Recovery
2002>07 = 12.7%
Post-Lehman Economy
2008>19 = 4.7%
Demand-Side:
◆ No-One Believed Pre-Lehman SC Demand Would Return
◆ Received Wisdom: “Industry Has Matured , It’s Now Low Single Digit Growth”
Source: WSTS
Normal Y2 Recovery Curtailed By
US-China Tariffs /Trade War &
Heightened Economic Uncertainty
Covid-19
Pandemic
12. Slide 12
Perfect Storm Brewing … No Slack In The Supply Side
Source: SEMI/WSTS
Supply Side:
◆ 2008-2019 CapEx Reflected ‘The New Low Level’ Of Demand Expectations
◆ 2020 Modest ‘Reactionary’ CapEx Increase, On Stream Starting Q4-21?
◆ 2021 More Robust CapEx Increase, On Stream Starting Q3-22?
5%
10%
15%
20%
25%
$0
$100
$200
$300
$400
$500
$600
1991
1992
1993
1994
1995
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1997
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2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021F
Total
CapEx
Equipment
%
SC
Sales
Total
SC
Sales
($b)
Total Semiconductor Sales ($b) Total Equipment % SC Sales
13. Slide 13
Perfect Storm Brewing … Supply-Demand Balance
What Could Possible Have Gone So Wrong?
◆ Consolidation & Out-Sourcing, Reduced Capacity Options (No Plan B)
◆ Industry Now ‘Fab Tight’, Built To Demand (Commitment, Not Speculation)
◆ CapEx Spend Trending At Historically Low Levels Since 2007
◆ Small Demand Uptick Quickly Collapsed The Status Quo
(Just As With Petrol & Toilet Rolls, Shortages Quickly Turn To Panic)
Warning Signs Were All There (Capacity Shortages Waiting To Happen)
◆ Shortages First Surfaced In 2018 (Y2 Of 2017-18 Cyclical Boom)
◆ 2019 ‘Recession’ Was Classic Y3 Adjustment To 2017-18 Boom
◆ Impact Of 2018 Shortages Curtailed By Systemic Slowdown In Demand
(US-China Tariffs & Trade War Plus Economic / Business Uncertainties)
◆ Covid Increased The Demand For ICs, Despite WW Collapse In GDP
14. Slide 14
Source: WSTS/Future Horizons
Perfect Storm Broke In July 2020 (But No-Body Was Paying Attention)
◆Strong 2H-2020 Set The Stage For Double Digit Growth In 2021
- Economy … GDP V-Shaped Bounce Back (China Leading The Way)
- IC Units … Continuing Strong, With Supply Shortages Starting To Bite
- Fab Capacity … CapEx Still Trending Below Long-Term Average
- ASPs … Still Recovering, Always Lag Unit Recovery By A Year
◆Industry Fundamentals Had Not Changed (Still Cyclical / Still Strong Growth)
◆Storm Brewing Since 2018, Just ‘Never’ Broke (Lulling Everyone Into Complacency)
◆Supply Maxed Out In Q4-2020 Due To Under-Investment In Q4-2019
(You Can’t Blame Covid For That!)
◆Widespread Disregard For Supply-Demand Fragility (Despite Clear Warnings)
Quarter Market Growth
Q1-20 104.560 -3.6%
Q2 103.423 -1.1%
Q3 113.526 9.8%
Q4 117.573 3.6%
2020 439.082 6.5%
15. Semiconductors 101 – Supply Demand Dynamics (Gas Tank Effect)
1. For Each Car On Empty One Has Just Filled Up, Average All Cars = Half Full
- Supply Chain Is Nicely Balanced
3. Supply Eventually Rebalances, Queues Disappear, Drivers Stop Buying Petrol (Gas)
- Average Again = Half Full
Same Thing Happens In SCs, But It Takes Over A Year To Rebalance
Supply
◆ Demand Rises, Lead-Times Extend, Buyers Order More Stock (To Cover The Delay)
◆ Increased Demand Met From Die Bank, Consignment Stock Buffers, Line Balance Tweaks
◆ ‘Wait One More Quarter’ Means Suppliers Don’t Take Increased Demand Seriously
◆ Lead-Times Extend More As Suppliers Struggle To Replenish & Build Stocks
◆ Die Banks Drained, Added Wafer Starts Needed To Meet (Now Inflated) Demand
◆ Customer Long-Term Agreements To Secure Future Supplies Plus Double-Excess Ordering
◆ Eventual Investment In New Capacity But Take 12 Months Minimum To Come On-Line
◆ Supply Overshoots Demand, Lead Times Shrink, Orders Collapse… Classic Pig Cycle
2. Supply Becomes Tight, Everyone Immediately Fills Up, Average All Cars = Full
- Surge In Demand Throws Supply Chain Off Balance
- Supply Can’t Keep Up, Fueling Queues, Panic & More Shortages
16. Semiconductors 101 – IC Unit Shipments
Monthly IC Unit Shipments
(5-Week Month Adjusted)
◆ Units Shipped = Real Demand + Inventory/Lead-Time Adjustments
◆ In Times Of Shortage, Orders Are Over-Inflated (= Demand + Adjustments)
◆ Once Supply Catches Up, Orders Collapse (= Demand - Adjustments)
◆ Demand (As Seen By The IC Firms) Can Be Seriously Distorted
(2x Real Use During Growth Phase & 0.5x In A Slowdown)
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
Jan
03
Jan
04
Jan
05
Jan
06
Jan
07
Jan
08
Jan
09
Jan
10
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
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Jan
17
Jan
18
Jan
19
Jan
20
Jan
21
IC
Unit
Run
Rate
(Billions/Week)
Overshoot (Both Ways) & Correction Inevitable, Only Uncertainty ‘When’
17. SC Industry Cycle
14th Correcting Crash Inevitable, Only Uncertainty Is ‘When’
We Are Currently Here
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
5% 10% 15% 20% 25% 30%
Change In End User Demand
Unit
Growth
Impact
Ramp Up - In Tight
Capacity Market
Steady State Demand
Overheat Potential
'15-24 Month' Year
'5-8 Month' Year
Slowdown Potential
Typical Profile
18. Slide 18
Agenda
◆ Semiconductors 101
➢ Characteristics / Driving Forces
◆ The Perfect Storm
➢ Under Supply / Over Demand
◆ Market Outlook
➢ Will Boom Turn To Bust
Part 1 – Economics Of Fabless
Semiconductor Companies
19. Slide 19
2021 Forecast Summary (As At Jan 2021)
◆‘Consensus’ Average = 9.9% vs. FH Forecast = 18% (Min 11% Could Even Be 24%)
◆Shortages Through 2021, Possibly Longer
◆Stage Had Been Set By 2020’s Strong Second Half Performance
Dismissed At The Time As “Ever-Optimistic”, By June Everyone Was Forced
To Revise Their Forecasts In Line With Ours!
Source: SEMI
20. Slide 20
Current Outlook For 2021 … +25.5% (Up from 18% in Jan, Close To Our +25% Upside)
Biggest Forecast Risk? …
◆ Major Economic Hit (Very Unlikely To Happen)
◆ Oversupply In Q4-2021 (Possible, Precise Timing’s Hard To Predict)
Quarter Value ($b)
Q1-21 4.9% 123.343
Q2 9.3% 134.863
Q3 7.4% 144.841
Q4 2.1% 147.883
2021 25.5% 550.930
Quarter Value ($b)
Q1-21 4.9% 123.343
Q2 9.3% 134.863
Q3 7.4% 144.841
Q4 3.8% 150.345
2021 26.0% 553.393
Quarter Value ($b)
Q1-21 4.9% 123.343
Q2 9.3% 134.863
Q3 7.4% 144.841
Q4 -2.5% 141.220
2021 24.0% 544.268
Little Numerical Upside (Partly It’s The Maths) Huge Psychological Impact
21. Slide 21
What Then For 2022? Correction Inevitable … +4% (-6% To +8%)
Biggest Forecast Risk? … Uncertain Timing
1. Uncertain Supply-Demand Impact (Due To 2H-2020 CapEx Increase)
2. Supply Surge In 1H-2022 (Due To 1H-2021 CapEx Increase)
3. Covid-19 Fiscal Support Unwinding (Uncertain Economic Impact)
Quarter Value ($b)
Q1-22 -6.0% 139.010
Q2 -9.0% 126.499
Q3 1.0% 127.764
Q4 -2.5% 124.570
2022 -6.0% 517.844
Quarter Value ($b)
Q1-22 -1.6% 145.517
Q2 2.0% 148.427
Q3 3.8% 154.068
Q4 -4.6% 146.980
2022 8.0% 594.992
Quarter Value ($b)
Q1-22 -2.6% 144.038
Q2 1.0% 145.479
Q3 2.6% 149.261
Q4 -10.0% 134.335
2022 4.0% 573.113
22. Slide 22
2021-22 Pinch Points To Look Out For
◆ 2H-2020 Spend Up 25% On Previous 10 Quarter Run Rate
(Unlikely To Destabilise Supply)
◆ 1H-2021 Spend Up Further 23% On 2H-2020, 53% Overall
(This Will Trigger Supply Destabilisation)
◆ Q4-21/Q1-2022 Supply/Demand Overshoot Risk
(Coincidence Of Capacity Surge / Seasonal Soft Demand)
Once Supply Catches Up ‘Demand’, The Market Will Crash
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Q1-2018
Q2-2018
Q3-2018
Q4-2018
Q1-2019
Q2-2019
Q3-2019
Q4-2019
Q1-2020
Q2-2020
Q3-2020
Q4-2020
Q1-2021
Q2-2021
Wafer Fab Equip Sales
Wafer Fab Equip Sales
Base Line
+25%
+53%
23. Slide 23
Agenda
◆ Move From IDM To Fabless
◆ Be Careful What You Wish For
◆ Rethinking The Supply Chain Model
Part 2 – Global Offshoring Initiatives
24. Slide 24
Agenda
◆ Move From IDM To Fabless
◆ Be Careful What You Wish For
◆ Rethinking The Supply Chain Model
Part 2 – Global Offshoring Initiatives
25. Slide 25
Fabless Semiconductor Evolution
◆ Back In The Day All Firms Had Fabs But Low Chip Complexity Meant Labour Intensive
Assembly & Test Determined Device Manufacturing Costs
◆ Factories Moved Offshore, First Hong Kong Then Malaysia – Lower Labour Costs, Western
Educated Technicians, Good Technical Schools, Government Incentives
◆ As Complexity Increased, Die Cost Became More Critical & Wafer Fab Yield & Productivity
Started To Increase In Importance, Opening The Door For Japan
◆ As Complexity Increased Further, ASICs & ASSPs Overtook TTL/Gate-Level Standard
Parts, Driving Priority From Die To System Cost & Fast To Time To Market
◆ IC Designs Didn’t Need Advanced Wafer Processing (Competing With TTL) Opening The
Door For The Fabless SC Era Led By Chips & Technology IBM PC AT Chip Set
◆ Low Cost Of Entry (No Fabs To Finance) Plus Improved Wafer Foundry Access & Easy To
Use EDA Tools Triggered Second Explosive Wave Of Chip Industry Start-Ups
◆ Strained Fab/Fabless Love/Hate Co-Existence (“Real Men Have Fabs”) Until The 2000 Dot.com
Crash & Simultaneous Move To 300mm Wafers (1999-2002)
◆ E&M Decision Not To Support Sub-95nm Node Development On 200mm Forced Chip Firms To
Re-Assess Their IDM Needs & Strategy … Most Too Small To Fill A 300mm Fab
◆ Then Came The Lehman Collapse & 2008 Financial Crisis … By 2010 It Was Game Over For In-
House Manufacturing (Except Memories & Advanced Logic)
28. Slide 28
Gradual Advanced Logic Outsourcing Transition
Move From Planar To FinFET (Sub-22/20nm Node) Final Nail In IDM Coffin
29. Slide 29
IDM End Game
◆ By The End Of The 20’s Only 2 Advanced Logic IDMs Remained
- Intel (But Struggling) & Samsung (‘Subsidised’ By Memories)
◆ TSMC Now Dominated The Advanced Logic Landscape
◆ Fabless Rationale Morphed From ‘Faster Time To Market’ To ‘Balance Sheet Efficiency’
◆ De-Emphasis On CapEx/Manufacturing Meant Increased Profits, Improved Cash Flow, Bigger
Dividends, Better (Near-Term) Shareholder Returns, Fuelling Drive For Share Buy Backs &
Other Financial Shenanigans Enhancing Shareholder Returns & C-Level Renumeration
◆ No Interest By Anyone Non memory For Building Wafer Fabs Anywhere …
- Why, When TSMC Was Performing So Perfectly …
- Plus It Would Be Balance-Sheet (& Bonuses) Destructive …
- Fabless Is Fabulous … What Could Possibly Go Wrong?
30. Slide 30
Agenda
◆ Move From IDM To Fabless
◆ Be Careful What You Wish For
◆ Rethinking The Supply Chain Model
Part 2 – Global Offshoring Initiatives
31. Slide 31
The Industry Entered A Classic Supply Shortage
◆ Covid Surge In Demand Was the Trigger NOT The Cause
◆ Cause Was Several Previous Years Of Under-Investment
◆ Capacity Now Built To Order Not On Speculation
(Adding 1 Year To The Normal 4-6 Month Manufacturing Leadtime)
◆ Factory Interruptions Due To Power Outages, Fires & Covid Restrictions
34. Slide 34
Solutions vs Products – Supply Chain Challenges
◆ Covid-19 Exposed Global Supply Weakness
(Logistic Risk Today … Geo-Political Risk Tomorrow?)
◆ TSMC Controls 60% World IC Production
(23rd Province of China)
◆ Little Business Enthusiasm For Bringing Wafer Fabs Back Home
(It’s Not In The IDM’s P&L / Shareholder Interest)
◆ Political Backlash ‘Subsidising’ Foreign Fabs (TSMC / Samsung) Or (Intel / GloFo?)
(Especially US Taxpayer’s $$$s / State ‘Favourism’ … Why Arizona? / Why New York? …)
35. Slide 35
Agenda
◆ Move From IDM To Fabless
◆ Be Careful What You Wish For
◆ Rethinking The Supply Chain Model
Part 2 – Global Offshoring Initiatives
36. Slide 36
Home-Shoring Production – Zero End Market Pull
◆ IDM’s Don’t Want To … Board/Investor Pressure To Be Fabless
◆ No Demand From The System Houses To Favour Local Production
◆ No Appetite Either For OEM Directs To Fab Their Own ICs
(Apple, Google, Amazon, Facebook etc)
Services
$1.6t
$411b
$31b
$60b
$20t+
37. Slide 37
Partnership Or Adversarial?
◆ SC Industry Supply Chain Has Always Been Adversarial
◆ Customers Seek Lowest Price / Zero Commitment (From Wafers To Parts)
◆ In Times Of Undersupply, Roles Are Reversed … “Your Turn In The Barrel”
Customers Forced To Sign Long-Term Agreements & Agree Price Increases
◆ Until Supply Catches Demand, Prices Plumet / Contracts Re-Negotiated
◆ Everyone Talks ‘Partnerships’ … Very Few ‘Do It’
◆ Yet The Rewards Are Very Clear Once Outside The ‘Jam Today’ Mindset
38. Slide 38
Key Takeaways
➢ EV Is Causing A Seismic Auto Industry Disruption – The Old Model Is Dead (Ask Nokia)
➢ Pent Up End-User Demand – From Cars To Holidays & Everything In-Between
➢ Remote Working, Voice Activation & Video Conferencing – All Permanent Change
➢ Massive Acceleration Of Personal Health Care & Medical – Dwarfing Everything Before
1. 2020 Was A Normal Recovery Year, With Covid-19 Was A High-Tech Tipping Point
3. Onshoring & Supply Chain Issues Will Disappear Once The Shortages End
➢ Welcome To ‘Wall Street’ Shareholder Capitalism At Its Best (Worst?)
➢ It’s A Long-Term Strategic Problem, Beyond Any Government’s Attention Span
4. Current CapEx Explosion Will Overshoot & Trigger The Next Crash
➢ Enjoy The Current Super-Cycle, It Will Eventually End In Tears!
➢ In A Boom (Bust) Be Prepared (Plan) For It Ending Tomorrow … Fast Reaction Is Essential
Rethinking The SC Supply Chain Business Model
2. 2021 Supply Shortages Were Foreseeable & Classic Industry Behaviour
➢ All The Signs Were There, No-One Was Listening Or Paying Attention,
➢ Most Industry Execs Had Not Lived Through A Shortage (aka 2004, 1993, 1984)
39. Slide 39
Contact Details – www.futurehorizons.com
Future Horizons Ltd
Blakes Green Cottage
Sevenoaks, Kent
TN15 0LQ, England
T: +44 (0)1732 740440
E: mail@futurehorizons.com
Regional Offices In The UK & Russia
Affiliates In Europe, India, Israel, Japan,
Russia & USA
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Please E-Mail Me For A Copy Of The Presentation Slides