More on Semiconductors

 The semiconductor industry is cycling back and forth between high tech business and commodity business. As of now the industry is in the commodity mode. Semiconductor industry stock prices are down and companies are cutting their expenses.

China is suffering both from this cycling and from the ban on semiconductor related technology exports to many Chinese companies. In my opinion continued sanctions will destroy China's semiconductor dreams. The primary reason being that China's education system and R&D have not focussed on replacing the tool chain in both hardware and software. There is a 40 year built in advantage that cannot be replicated easily. 

Meanwhile in India, there have been some announcements regarding setting up fabs in Karnataka and Gujarat. But this is not even remotely realistic. The Gujarat fab will be a a joint venture between Vedanta, a mining business and Foxconn, an electronics assembler. Neither company have any intellectual property in semiconductors nor do they have any experience in semiconductors. To put it bluntly neither company knows the difference between a transistor and a hole in the ground. We shall see what happens. 

Though the semiconductor industry seems to be in a commodity business it seems so only because of the fabs being able to churn out wafers. But the design aspect of semiconductors is still very reliant on intellectual property ranging all the way from transistors to design tools to CPU architecture.