The fact that today the world economy has a deficit in the supply of semiconductors, is mainly due to the competition of the major economies of the world, ie the USA, EU, China, Japan, etc., the first three of which have raised this issue as a national security issue and the highest importance in terms of gaining a state of self-sufficiency in semiconductors and in a strategic mistake of the industries that believed that due to a pandemic the demand for them would decrease.
As the Covid-19 vaccine program progresses in the developed world economies, demand for semiconductors will skyrocket and the semiconductor industry will struggle daily to meet these demand levels.
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In the European semiconductor market, four industries specialize, e.g. Infineon, NxP, ASML, STMicro. In the US are the giant Intel, Nvidia, Micron Technology, Broodcom, AMD, Texas Instruments, Applied Materials, KLA etc. East Asia is dominated by Samsung Electronics Co., TSMC, Tokyo Electron, SMIC.
An additional obstacle to increasing semiconductor production is that such an investment (in semiconductor units) takes years to pay off and costs $ 2 billion.
As an investment it is particularly precarious, as the know-how is advancing with incredible speed, and technological developments must be followed otherwise the investment may be considered obsolete in one year. Processors are the most sophisticated devices mankind has ever made.
It costs about $ 15 billion a month to process 50,000 semiconductor processors. Most of the cost of this investment is directed to the required specialized equipment. The cost of this equipment today reaches $ 60 billion.
Given the combination of the highest investment costs, having a high level of know-how and a high degree of uncertainty and business investment, it is a very high barrier for the vast majority of investors to enter this industry.
In fact, these barriers leave the entire global market to a few companies. In the coming years, in order to meet the demand for semiconductors, these companies will have to proceed with their mergers-acquisitions and a drastic increase of Share Capital in combination with borrowing from the capital markets.
Certainly in this race for the top spot the companies Intel (USA), Samsung (North Korea) and TSMC (Taiwan) have the comparative advantage. Their factories are the most advanced in the industry and have cost from $ 20 billion each.
For 2021, TSMC plans to spend another $ 28 billion on equipment and new production units. Only these three companies have the ability to erect the required facilities.
