The downturn in the chip industry began in the summer months when the market for graphics cards became hard to find. Graphics hardware prices dropped almost half due to demand easing up. The company made too many graphics cards and now needs to sell them for less money. There is more than one person in this mess.
Last year, the only story about chips was that manufacturers couldn't make enough of them to meet the strong demand for consumer electronics. Even as shortages continue for certain types of Semiconductor, the story is becoming more nuanced, especially for giants likeSamsung andAMD, who were flying high on revenues and profits.
They are being swept over by the same tide that swept up the other two companies. According to the report, this week,Samsung is reporting a 32 percent sales guidance cut, whileAMD warned investors that it will miss its previous forecast by $1 billion.
The slump in PC sales is an obvious explanation for why the processors from Intel and Advanced Micro Devices aren't in high demand. Everyone had an incentive to upgrade their laptops, gaming machines, and work-from- home setup.
According to Intel CEO Pat Gelsinger, one way to turn that around is for manufacturers to make better products than what is done by the Mac. There is no end to the period. Even though that hasn't happened yet, it doesn't begin to address the demand for cloud server and other machines
We asked the analysts if other manufacturers were also facing high inventories and low demand. The analysts said that the inventory was piled in the first half of the year. Even though other areas like automotive are strong, they pointed out that the weak forecasts in PCs, smartphones, and consumer electronics were the reason for the warnings from the two companies.
The memory and storage chip business of SAMSUNG made it the largest chipmaker over Intel in the last year. In July, Intel lost money and reported a decline in revenue due to low PC sales and operating losses.
Demand for chips of all kinds peaked at the turn of 2022, and companies likeSamsung had record high revenue in 2021, with a 26 percent increase in profits compared to its previous high in 2020.
According to WSJ, contract prices for both DRAM and NAND flash chips will decline until at least the end of the year.
Concerns have been raised about how the chip export restrictions to China could affect the industry. This will hurt Chinese companies' long-term goals of becoming self-sufficient technology leaders, according to analysts. As part of an effort to impair Beijing's military and technological capabilities, the new rules would require manufacturers like Intel and Micron to get a license to export to Chinese companies.
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