Short Product Life Cycles. The semiconductor industry has always operated on a highly cyclical cycle. This is best explained by the excerpt below from the 2012 annual report of Texas Instruments, Inc.
"The “semiconductor cycle” is an important concept that refers to the ebb and flow of supply and demand. The semiconductor market historically has been characterized by periods of tight supply caused by strengthening demand and/or insufficient manufacturing capacity, followed by periods of surplus inventory caused by weakening demand and/or excess manufacturing capacity. These are typically referred to as upturns and downturns in the semiconductor cycle. The
semiconductor cycle is affected by the significant time and money
required to build and maintain semiconductor manufacturing facilities