Deutsche Bank: There are three major driving factors for this round of semiconductor super cycle, and the turning point of the cycle will come in 2023

Deutsche Bank recently released a special report, which analyzed in detail the causes and future trends of this round of semiconductor business cycle.

By reviewing semiconductor industry data since 1977, Deutsche Bank believes that the global trade cycle and the behavior of manufacturers and downstream customers have formed cyclical fluctuations in industry macro data. After the 1990s, the industry has formed an average business cycle of 27.7 months, and the current business cycle has lasted for 29 months since October 2019, exceeding the normal cycle.

Deutsche Bank analysts said that this round of semiconductor super cycle stems from the resonance of three major factors: digitalization, the COVID-19 pandemic and geopolitics, and is expected to last longer than the 38-month super-long boom from 2005 to 2008.

Looking further ahead, Deutsche Bank believes that the industry's current capacity expansion is riskier than in history because the investment required for more advanced support is rising rapidly. In the late 1990s, the industry's revenue to capital expenditure ratio was 7, but now it has fallen below 4, which means that once the forecast of future demand is wrong, the expansion of production will cause greater damage to manufacturers.

DeYi predicts that this round of semiconductor super cycle will eventually end at the end of 2023, and the cycle will last for 51 months. After entering the downward cycle, according to the data of the past seven cycles, the industry's revenue may drop by about 22% from its peak.