What you want is predictability and stability. The bullwhip effect of supply chain disruptions alternate between shortages and gluts, and they both cause economic damage.

Having a glut of a product or resource destroys manufacturing capability as employees get furloughed, factories shut down, and talent is lost. ...it then creates a shortage when demand picks up and so on.

Markets are good at reacting if the future is predictive, but if it is unexpected, then there is damage in both shortages and gluts.

Importantly, the more complex and deep a supply chain is, the more unpredictable and magnified the bullwhip effect becomes, even when you expect gluts/shortages. This is because every participant in the chain attempts to cushion themselves from the shocks by stockpiling and timing their sales.

In a perfect system, you are more correct than you give yourself credit for. This is not that. In case you haven't noticed, a GPU costs more than the rest of the components of a PC combined. And that's because of so-called market and or supply chain inefficiencies (which I'm supposed to, as a consumer, take on the chin).

In spite of political, personal, or professional neglect, (don't care which one) chip companies are posting gargantuan earnings YOY and seem to be doing fine.

On the other hand, my sibling can't afford a car or a non-pre-built computer.

I guess it's not clear in your post, but who exactly are we looking out for here? The furloughed talent? The "market"?

And regardless, how is that my problem?

Again, I would love to have a level headed discussion about this, but please be honest about who truly loses in an oversupplied market.

BTW, because I see this here a lot: just because the whole "it's more complicated than you think" rationale is not a commonly accepted logical fallacy, doesn't mean that it's not bullshit all the same.

Oversupply is great for consumers but very bad for suppliers. Neither extreme is healthy long term. You generally want a balance between supply and demand so that suppliers have a predictable target they're aiming at and can expect a reasonable profit given the capital expenditures needed to make next generation products. If we go into a prolonged oversupply situation, that will be great for prices to consumers in the short term. However the longer it persists this will of course limit, or even eliminate, profits that can be made. As a result, companies will reduce production capacity and eventually R&D for their next generation products. This in turn will tend to increase prices with minimal product improvements longer term.

I hear you man, but guess what, I'm not a supplier, so again: qui bono.

You're argument assumes we have anything close to a healthy economy now. And in another world, you'd be right. However, that not being the case, your argument is moot at best and disingenuous at worst.

You're looking at it purely from the short term perspective of say GPUs, cars etc. as a consumer. Sure, a short term oversupply to drive prices back down to a sane level (or even below sane for a little while) would be a good and healthy thing. That's coming.

However, what the article is talking about is the risk of a longer term oversupply situation at the foundry level. If that happens the result will likely be even more consolidation. The downside to you as a consumer would be lack of innovation and flat to higher prices over time.[1] Once you get below a handful of players in a market, the worse your options as a consumer get.

[1] see Intel CPUs for much of the 201X's

The bullwhip effect, the wikipedia page on it is pretty good, has nothing to do with the economy per se. I don't think we have seen it at display as big, as long and as global in my life time. My professional opinion is that a lot can simply attributed to disrupted supply chains and an overall bullwhip effect.

Over supply lead to consolidation. The weak get acquired. There are currently only 4 legit foundries, a legitimate crisis could turn that into 2 or 3. The less competition there is the more market failures there will be.

So you're saying NVIDIA will just give up and stop making video cards?

Not at all. The first noticeable things they'd probably do are ramp down production to meet demand and stretch out product generations even longer. The improvements between generations would be much smaller when they did arrive. Prices would still likely go up generation over generation. The less profit they can look forward to from increasing unit sales from market demand, the more they'd start cutting corners to make their numbers from the demand that did exist... one way or another they will make as much money as possible.

It's arguable that they've been doing a bit of this over the past couple of generations... it would get far worse in a chronic oversupply situation.

I don't find a transition from JIT to JIC to be very bad for anyone.

In general, oversupply is bad for everyone because all suppliers lose money, but only the ones with deep pockets can survive - increasing market concentration. In this case, I‘m not sure it hurts, since the chip market is already dominated by big companies.

There we go brother! You're almost there!

Because fewer people click on articles that don't have crisis in the title.

You have to pay for capital depreciation of unused capital. Money does not depreciate except via inflation. So people will tear dismantle the factory and trade it in for something that does not depreciate ie money.

We end up richer on paper and poorer in reality.

Volume 1 Marx would say that the unused capital still represents a source of exploitation. Volume 2 Marx and beyond would say that the problem lies in the circulatory sphere and that it is the money capitalist that is threatening the productive capitalists.

Elpida and Qimonda (DRAM manufacturer) were bankrupted because of oversupply. Then oligopoly coming.

A lot of people consider lean manufacturing a religion and can't seem to see that there are some holes in the plan when you go outside a nation and see that some countries just don't like each other and will use their country's businesses as political capital.

I agree with you man and you would think that would be a given.

However, the critical flaw of highly rational actors is that their actions always incur a reality tax, and, more likely than not, they're nowhere to be found when the bill comes.