Hermann Rapp

The AI boom has had important implications for the semiconductor market. In particular the logic chips are in high demand. In 2023 surging demand was constrained by shrinking supply. This resulted in a substantial fall in units sold whereas prices surged. Here we analyze the underlying economic and technological drivers and forecast the development of global sales of the semiconductor market until the end of 2025. [more]

Current advances in AI and a media-savvy generation - in combination with the Internet of Things, edge computing and 5G - provide the opportunity to rethink smart city models such as City 5.0 and soft city. We discuss some use cases – and the trade-offs to be resolved – that arise from connecting and automating a city. Besides digital platforms – now augmented by AI –, smart city market segments such as smart buildings, digital energy and environmental solutions are expected to grow strongly in the coming years. Since not all of these are likely to be publicly funded, interesting investment opportunities do arise to create more efficient, sustainable, and livable urban spaces. [more]

Semiconductors rank first as the most traded goods in global trade statistics in 2020, representing 15% of total global trade in goods. Before 2015, they were surpassed by computers and crude oil, based on the HS4 categorization by the World Customs Organization (WCO). Prices for semiconductors have fallen dramatically and steadily since 1995, both in real and nominal terms. Our new Trade Chain Complexity Index (TCC Index) allows for a comparison of the ratio of global trade with sales of various goods. For semiconductors, the TCC Index shows a peak of 7.2 for 2008. Since then, the complexity value has steadily decreased with a value of 5.9 for 2020. This trend might be the first sign of more cautious supply chain strategies in a challenging macro environment - and a downward trend for semiconductor globalization in a new era of digital sovereignty. [more]

Global sales of semiconductors reached an all-time high in 2021. At the same time, global tensions and growing awareness of the fragility of supply chains have led to a reassessment of the strategic importance of global supply chains and semiconductors. We use our Structural Semiconductor Sales Model (3SM) to explore the extent to which government initiatives on digital sovereignty in the US, Europe, and Asia will impact chip manufacturing capacities. In doing so, we calculate structural (i.e., non-cyclical) supply and demand for the period up to 2030. Assuming a continuation of historical supply and demand trends and a further tightening of the ratio of sales to investments (sales-to-capex ratio), it is our forecast that a huge structural demand gap will emerge in 2030 that cannot be closed by the government subsidy programs announced to date. From this perspective, today’s temporary supply chain issues may overlap with or be succeeded by structural shortages. [more]

Digital policy has become increasingly important in recent years. With its digital strategy, the German government has presented an agenda for which a digital budget is to be adopted in the Bundestag in November 2022. This is an important contribution by Germany to the EU's Digital Decade, particularly in the four areas of connectivity (5G and fiber coverage), digital skills, the use of digital technologies and AI in companies, and the provision of digital public services. Further legislative initiatives at EU level have as their goal the creation of a digital space in order to be able to compete internationally with Asia and the USA. To this end, the German government's digital strategy sets priorities in 25 fields of action. The next three years will be decisive for an effective implementation of the digital reform program for Germany. [more]

In 2021, global sales in the semiconductor industry reached an all-time high of USD 556 bn. Despite this record figure, the industry currently faces severe challenges as the present semiconductor cycle is characterized by a triple whammy: Huge demand due to a boost for digitalization, COVID-related and non-COVID related supply shortages and geopolitical tensions. Due to the sharp rise in chip demand, new chip factories are currently being built in the US, Asia and Europe to meet rising demand over the next decade. We think, the present sales cycle will be extraordinary long. [more]

Quantum 2.0 super technologies will massively change the way we live and work. Quantum has the potential to shape a new economic era. The vision of Quantum 2.0 is that processing power of quantum computing could skyrocket which allows the development of previously technologically unfeasible products and technologies such as an ultra-high performance secure quantum internet. Real-time quantum applications and quantum AI might organize our daily lives. It could also open the door to a new kind of science with novel materials and products in probably every field from medicine to chemistry and physics. As a consequence of these developments, the number of new goods and services may explode. This potential revolution leads to new economic and social questions which we tackle in this publication. It also provides an overview about developments in quantum computing and quantum software. [more]