Last year, the only story about chips was that manufacturers couldn’t make enough of them to meet strong demand for consumer electronics, automobiles and other products that require semiconductors. But even as shortages of certain types of semiconductors continue, the story is becoming more nuanced, especially for giants like Samsung and AMD, which posted high revenues and profits in 2021 and 2022.
Now they are being engulfed by a tidal wave that similarly swept Nvidia and Intel this summer. As reported by Bloombergthis week, Samsung reports a 32 percent cut in sales guidance, while AMD warned investors it will miss its earlier forecast by about $1 billion.
Falling PC sales provide an obvious explanation for why AMD and Intel processors are not as popular as they were at the start of the pandemic. Everyone had an incentive to upgrade their laptops, gaming machines and work-from-home setups at the same time, but now sales have slowed down.
Unidirectional manufacturers would like to turn that around, as Intel CEO Pat Gelsinger described Decoder, is “to enable the PC ecosystem to have better products than what the Mac does. Period.” But that hasn’t happened yet, and for giants like Samsung, it’s not even starting to address the slowdown in demand for cloud servers and other machines.
We emailed Gartner analysts Gaurav Gupta, Joseph Unsworth and Jon Erensen, who confirmed that The edge that other OEMs also face high inventory and low demand. “OEMs had stock piled up in 2021 and the first half of 2022 – during shortages – panic buying/double triple orders, etc.” according to the analysts. They also pointed out that these warnings from Samsung and AMD are due to weak forecasts for PCs, smartphones and consumer electronics, although other areas, such as the automotive sector, are relatively strong.
Samsung’s memory and storage chip business made it the largest chip maker relative to Intel in 2018, although the latter company mainly makes x86 processors. In July, Intel suffered losses, reporting a 22 percent drop in revenue due to low PC sales and operating losses to get its Arc GPUs out the door.
Demand for chips of all kinds peaked at the turn of 2022, and companies like Samsung had record sales in 2021 with profits up 26 percent (compared to the previous record in 2020) due to increased demand for consumer electronics such as smartphones and TVs.
But now WSJ reports that contract prices for DRAM chips are down 15 percent and 28 percent for NAND flash chips (the two main components Samsung makes), citing a TrendForce forecast that those declines will continue to fall until they reach the end of 2023. will almost level off.
There is also concern about how the Biden government’s just revealed chip export restrictions to China could affect the semiconductor industry. Gartner Analysts Tell The edge that this will slow the progress of Chinese companies and hurt their long-term goals to become self-sufficient technology leaders. The new rules would require manufacturers like Intel and Micron to obtain a license to export semiconductors and chip-making equipment to Chinese companies as part of an effort. allegedly intended undermine Beijing’s military and technological capabilities.
