Demand Surges from multiple industries simultaneously — AI, EVs, Smartphones, Data Centers, and Defense all needing chips at the same time. Supply can't keep up, so prices spike, margins explode, and stocks run hard.
The cycle typically goes:
Undersupply → prices rise → companies over-order (bullwhip effect)
Fabs ramp production → oversupply hits → prices crash (Fabs = Fabrication Plants think of Taiwan Semiconductor and Intel)
Companies cut capex → undersupply again → repeat
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