The down cycle (to be exact, boom-and-bust cycle) is structurally inevitable in the semiconductor market.
For the supply-demand feedback loop to work smoothly, you want the supply to be incremental and quick-to-respond to demand changes. The semiconductor fab is anything but. There are many other reasons for this https://www.forbes.com/sites/jimhandy/2014/05/28/the-3-reaso... but I think the critical reason is that when there's a supply shortage, there's naturally a race among suppliers to build more capacity as soon as they can, so that they can sell more, but the inherent time delay (measured in years) in building up the extra supply combined with the fact that a single new fab gets bigger and more expensive lead to inevitable oversupply, which causes the price drop, which reduces the amount of money to invest for the next cycle, which leads to undersupply a few years later, and rinse/repeat.
The pandemic created one of the biggest demand spikes for semiconductor ever, and combined with the nationalistic stance on building own supply in each country, I suspect this spike will have a ripple effect for the next few years.
For the supply-demand feedback loop to work smoothly, you want the supply to be incremental and quick-to-respond to demand changes. The semiconductor fab is anything but. There are many other reasons for this https://www.forbes.com/sites/jimhandy/2014/05/28/the-3-reaso... but I think the critical reason is that when there's a supply shortage, there's naturally a race among suppliers to build more capacity as soon as they can, so that they can sell more, but the inherent time delay (measured in years) in building up the extra supply combined with the fact that a single new fab gets bigger and more expensive lead to inevitable oversupply, which causes the price drop, which reduces the amount of money to invest for the next cycle, which leads to undersupply a few years later, and rinse/repeat.
The pandemic created one of the biggest demand spikes for semiconductor ever, and combined with the nationalistic stance on building own supply in each country, I suspect this spike will have a ripple effect for the next few years.