Managing the booms and busts of the semiconductor market

1 min read

At a time when both Samsung and TSMC are signalling big chip price rises the US and the EU are looking to work together to boost domestic production of semiconductor chips, without triggering a damaging ‘subsidy war’.

The US-EU Trade and Technology Council (TTC), which was established to bolster transatlantic cooperation and strengthen chip supply chains, is looking to encourage chip investment but to do so in a more coordinated fashion ensuring improved security of supply. 

The TTC was a response to the industry-wide shortage of chips that's impacted many different manufacturing sectors, and which has forced a growing number of firms to scale back production.  

While the TTC is now meeting in Paris and expected to look at better pinpointing and addressing semiconductor supply chain disruption the forecaster, Horizon Research, has suggested that the semiconductor market will collapse next year with sales tumbling by over 20 per cent. 

The boom-and-bust cycles of the semiconductor industry remain endemic due to a lack of collaboration between suppliers and users and there is a constant imbalance between demand and supply, according to Horizon CEO Malcom Penn. 

If the US and Europe could work together to better manage the supply of semiconductors, encouraging suppliers and customers to improve the way they manage and handle capacity, might it be possible to end these damaging booms and busts or are we doomed to simply continue the cycle?