The Taiwanese semiconductor giant is showing consistently strong economic performance. The overall revenue for January to July 2021 was about US$31.1 billion, up 18.1 percent from the same period in 2020. TSMC approved capital appropriations of approximately US$17.5 billion for several high-tech areas.

All the company’s efforts are focused on the technology to improve transistor performance and reduce manufacturing costs. Most of the success of the semiconductor industry can be attributed to the successful scaling of the transistor in size. But the sizes of transistors have reached their limits. Physical principles do not allow making transistors even smaller. Therefore, the first priority area is R&D capital investments and sustaining capital expenditures.

New device technologies and logic can come to the rescue. Understandably, TSMC directs huge cash flows to the development in various areas:

• naturally new principles of logic,
• development of new structures of the transistor or the improvements of the old ones,
• modification of the active region of the transistor to increase energy efficiency (channel with high mobility),
• devices and components with small dimensions (this is when there are materials in devices that, for example , several atoms in thickness),
• new technologies for creating memory components, and much more.

Nevertheless, investing in these areas carries great risks. Much research will go nowhere, and many will become obsolete before serial and mass production equipment is available.

Therefore, the following priority areas are installation of advanced technology capacity and mature and specialty technology capacity, upgrade of advanced packaging capacity, manufacture construction and installation of facility systems. For semiconductor companies to stop is to lose. Thus, innovation, as well as research and development will be the mainstream strategy of the industry leaders.

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fig 1. The Depths of the corona crisis Left chart: World GDP and trade dynamics (actual till 2020, IMF forecast for 2021-22). Source: IMF data Center chart: Apple mobility trends for G7 countries. Source: Apple Inc. Right chart: VIX index. Source: CBOE

Then, in September-December 2020, came the stabilization at the bottom. Situation calmed down albeit at the very low levels. Indeed, the depth of the fall varied with activity in many services sectors ground to a halt, while in sharp contrast to many previous crises manufacturing and investments did better, as well as the financial sector. However, in general the panic leveled out and CEOs and corporate strategists started thinking about the life after the crisis.

fig 2: Employment by sector. Source: OECD data

Since the start of 2021 the hope and the rebound have come. Multiple vaccines approval allowed to start the immunization process. The rates of vaccination are different by country but the world in general seems to be on the right track, so achieving herd immunity looks like a question of time. Managers’ optimism has also picked up in the recent months and now everybody is hastily developing the best strategies of corporate development for the years to come.

fig 3: PMI by country. Source: Bloomberg

So what should you look at when developing you company’s strategy in the not-so-brave new world?

To use a simple rule-of-thumb approach there are 3 key factors to consider:

• the prospects for dealing with the disease itself;
• the persistence of the social distancing measures and popularity of distance work after the pandemic is gone;
• the pace with which the major policymakers will be curbing fiscal and monetary stimuli.

So here these factors are grouped and ranged by the 3 major scenarios that any meaningful strategy usually considers. The strategic horizon is 3 years.

So you decide on the probability of each scenario and then you create your strategic growth plan placing resources accordingly. In any case, you company’s growth strategy should also take into account the industry your company is working in: services sectors are to stay more influenced by the future rebound dynamics than the rest parts of the economy.

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Shipbuilding is considered a conservative industry, and for a good reason. Steel ships had been first commissioned in 1870s, and while riveting was replaced by welding, dry docks became common for ship hulls assembly (instead of inclined slipway), and large-block assembly improved the building time and economics, the very nature of the vessels built did not change much. However, with advances in light materials and fluid mechanics, a totally new breed of ships emerged, capable of moving with speeds unthinkable of, or barely attainable by traditional commercial vessels.

The business case for these high-speed vessels was dual. First, it complemented traditional passenger vessels (e.g. ferries) on sea routes with high passenger volumes and short-to-moderate (tens to low hundred miles) distances – a class of high-speed ferries. Second, it became an important component of navies across the world, especially those operating in “narrow” seas and/or having serious Marine forces that need a reliable tool for landing on an unprepared shore

Along with Soviet hydrofoils of Alekseev Design Bureau, an early example of successful hi-speed vessels were The La Manche hovercrafts of Mountbatten class capable of carrying 400 passengers and 60 vehicles across the Channel in about half an hour. However, increasing fuel cost in the post-1973 world, and subsequently the Tunnel have put these famous high-speed vessels out of service. In the 1980s, a more energy-efficient and seaworthy class emerged, the wave-piercing catamarans and trimarans with narrow hulls of great elongation. By its very nature, they can carry far greater payloads than vessels with dynamic support like hovercrafts and hydrofoils, and at a fraction of cost. The first large vessel of this class, a 28-meter Spirit of Victoria, entered service in 1985, and since then there was a marked growth in size and deadweight, the largest modern ones being over 100 meters long and having deadweight in thousands tons

The past and present leaders in this segment of shipbuilding industry have varying pedigree. The La Manche hovercrafts were built by British Hovercraft Corp. that had been created through a merger of the respective divisions of Westland Aircraft and Vickers Supermarine, both reputed names in the aviation world. Incat, on the contrary, developed itself from a conventional Australian shipyard specializing in conventional ferries, Sullivans Cove Ferry Company (SCFC). It was both ship constructor and operator of a ferry line between Australia and Tasmania, and this combined business model was likely to give an in-depth understanding of passenger needs and nuances of running a busy ferry line (for some time after collapse of the Tasmanian Bridge, ferries were the only means of day-to-day commuting between the island and the mainland). Through some changes in ownership (still remaining a private business owned by the founding family and partly by the employees) the company expanded its operations well beyond the Southern Hemisphere, becoming one of global leaders in its segment. However, no advantage in this world is forever, and new contenders come to the market fromChina.

Andrew Yashin, strategic analytics and consulting expert

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