Determinants of the semiconductor industry cycles

This paper aims at identification of the main explanatory factors of the global semiconductor industry cycles. The empirical results from a 12-variable vector autoregressive (VAR) model confirm that both the semiconductor inventory and the fab capacity play important roles in signaling the future state of the semiconductor business. This finding is also consistent with the industry practitioners' observations, such as McClean, B. (2001a). 2001 IC industry at the crossroads. Semiconductor International, that the semiconductor industry cycles were mainly caused by the industry overcapacity.