“Plunge” of the global chip manufacturing industry

In August, Jensen Huang – Nvidia’s CEO, admitted that the company had produced so many graphics cards that it had to sell them at a lower price.

Just last year, the only story about chips was that manufacturers were unable to produce enough to meet the strong demand for consumer electronics, automobiles and other products that require semiconductors.

Right now, they’re being hit by the same “tide” that swept Nvidia and Intel over the summer.

Falling personal computer (PC) sales are a clear explanation for why AMD and Intel processors aren’t in as high demand as they were at the beginning of the pandemic.

Gartner analysts Gaurav Gupta, Joseph Unsworth and Jon Erensen say that OEMs (original equipment manufacturers) are also facing problems with high inventories and low demand.

They added: “Many computer manufacturers are ordering twice as much as they need. Therefore, OEM inventories will increase in 2021 and the first half of 2022.”

Samsung’s memory and storage chip businesses helped it overtake Intel as the world’s largest chipmaker in 2018. In July, Intel posted a loss with a 22% drop in revenue due to demand. 

Meanwhile, demand for chips of all kinds peaks in 2022 and companies like Samsung hit record highs in 2021 with profits up 26% (compared to previous highs in 2020) driven by demand for chips with consumer electronics such as smartphones and TVs higher.

But according to WJS, contract prices are now down 15% for DRAM chips and 28% for NAND chips (two key components manufactured by Samsung).

In addition, there are concerns that the US restricts exports to China.

The new rule will require manufacturers such as Intel and Micron to obtain licenses to export semiconductors and chip-making equipment to Chinese companies.

Source: The Verge