Chip demand is faltering as companies add supply. The $166 bln memory market is consolidated so leaders like Samsung can quickly cut output to protect profit. Chinese entrants and reshoring efforts might upend that soon: mak_robyn
Samsung Electronics workers stand with wafers at its chip contract manufacturing facilities in Hwaseong, South Korea, in this handout image acquired by Reuters on June 30, 2022. Samsung Electronics/Handout via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. NO RESALES. NO ARCHIVES. - RC2P0V9EJPLZJuly 28 - The outlook for the chip sector's brightest spot may be dimming. Semiconductor demand is faltering as companies and officials spend billions adding supply.
can quickly cut output and protect profit. Chinese entrants and attempts by foreign governments to reshore manufacturing might upend that soon. As pandemic-induced shortages ease, while inflation and recession concerns deduct from demand for smartphones, PCs and other electronics,is looming. Because chipmakers are investing record sums to increase capacity nevertheless, the market could find itself swamped for some time.
At present much of new investment is concentrated in processors, an area of strategic competition as governments try to build artificial intelligence champions. The memory market is in better shape. Semiconductors used for storage accounted for 28% of the $595 billion of total chip revenue last year, according to industry tracker Gartner. Although prices have been falling, memory-chip makers like South Korea's Samsung have navigated the downturn with aplomb.
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