A few chipmakers, notably Micron and AMD, have signaled to weaken demand as high inflation squeezes spending, even as it alleviates a two-year worldwide semiconductor scarcity that has hampered production of everything from automobiles to cellphones.
Global chip stocks fell on Friday after memory chip maker Micron Technology Inc (MU.O) predicted substantially lower-than-expected revenue for the current quarter on Thursday and said the market had “weakened considerably in a very short period of time.”
On Friday, chip stocks were the greatest drag on the S&P 500 (.SPX). After falling 35% in the first half of the year, the Philadelphia Semiconductor index (.SOX) was down 3.5 percent.
Chipmakers were overburdened as they attempted to meet large orders from smartphone and personal computer (PC) manufacturers following an increase in demand from people working from home during the pandemic.
As a result of the scarcity, companies, especially automakers, cut output, delayed shipments, and paid exorbitant prices for crucial chips. Until recently, recent COVID-19 lockdowns in China had global executives expressing dire warnings about supply chokepoints.
However, rising global inflation has caused consumers to tighten their belts, with China’s regulations also affecting consumption. As a result, smartphone and PC sales have plummeted.
1 July (Reuters) – A few chipmakers, notably Micron and AMD, have signaled weakening demand as high inflation squeezes spending, even as it alleviates a two-year worldwide semiconductor scarcity that has hampered production of everything from automobiles to cellphones.
Global chip stocks fell on Friday after memory chip maker Micron Technology Inc (MU.O) predicted substantially lower-than-expected revenue for the current quarter on Thursday and said the market had “weakened considerably in a very short period of time.”
According to Gartner, global smartphone shipments to China, the world’s largest smartphone market, are likely to decline by 18% this year. It anticipates global shipments to fall by 7% as a result of supply-chain issues and the Russia-Ukraine conflict.
Nonetheless, Micron officials stated that they were optimistic about the long-term demand for their chips, and industry analysts stated that there was still a lot of demand for chips used in EVs, 5G, and high-speed computing.
