Yes, the semiconductor market is cyclical, and silicon wafers at the beginning of the value chain are even more cyclical. The view here is precisely that the 10-year slump is now turning into a multi-year bull market because capacity in the sector has not been expanded, and demand is growing strongly. Visibility is good because price levels for next year are largely known, and customers are willing to make increasingly longer contracts to secure raw material availability. At the same time, no significant capacity additions are in sight. So I’m looking at this case with a multi-year horizon to be part of the sector’s next upswing, but by no means with a “buy and forget” mindset. This could go wrong if the macroeconomy collapses… though I also see it that many underlying technology trends driving demand are moving forward partly regardless of the economic situation.
Wasn’t the sector’s turnaround a few years ago foreseeable? Well, you could ask Okmetic’s owners, for example, who sold the company 6 months before the cyclical lows… sure, these underlying digitalization trends were already being talked about then, but they weren’t showing up in the numbers. Exponential development is difficult to predict. Data and its storage are just one piece of the puzzle; in the big picture, I simplify it by saying that silicon wafers are the raw material for all digitalization. “The world needs us more than food,” a leader of a Japanese giant aptly stated. And only a handful of companies in the world can manufacture this raw material…