The chips are down! It’s a hard time for semiconductor industry to end 2022 in profits.
By Jayanti, analyticsinsight.net
With artificial intelligence technology advancement across several sectors, semiconductors are at the “heart” of billions of products, ranging from smartphones, computers, data centers, household appliances, laptops, tablets, smart devices, vehicles, life-saving pharmaceutical devices, ATMs, agri-tech equipment, and more. We are living in a world where every industry is either enabled by or dependent on semiconductors.
Digitisation drives the ongoing need for more chips, assisted by the four superpowers of AI, ubiquitous computing, cloud-to-edge infrastructure, and pervasive connectivity. But nowadays, the chip maker industry is facing a bit of whiplash, as the business has ricocheted from documented sales and profit during the chip shortage to what is looking more like a down cycle with every going week.
Semiconductors has been a boom-bust business for the last many years, and the industry is in a bit of disarray at the moment. Companies up and down the chip food chain are in motion to adapt their businesses to speedily changing conditions.
The Semiconductor Industry Association said Tuesday that the overall sale of July dropped by 2.3 percent to US$49 billion in comparison with June. At an investor conference in New York Wednesday Intel CEO Pat Gelsinger stated that the company is now expecting annual revenue to be roughly US$11 billion less than the annual revenue guidance of $76 billion it issued in April.
Gelsinger addressed problems Intel had delivering on its promises; he said the destruction from Ukraine war-related fallout, China’s COVID-19 lockdowns, and inflation in the U.S. are the three dominant factors behind the scene.
The choppy market is running well beyond what Intel is experiencing. In a recent earnings call, Nvidia gave an alert of a tough third quarter, and Samsung warned of a tough finish to 2022.
“Demand is down big time,” mentioned Matt Murphy, CEO of data center chip maker Marvell, at another bank’s conference Wednesday according to a transcript from Sentieo. “There’s certainly churn, in each end market, let’s be clear,” Murphy said. “You’ve got what you’ve guided and talked about. And then underneath, it’s like the duck going across the water.”
The arms dealers of the chip maker industry — the semiconductor manufacturing equipment makers ASML, Lam Research, and Applied Materials — are still facing difficulties to build enough machines.
“It’s like a tale of two cities, frankly,” Lam Research CFO Doug Bettinger announced at an investor conference Wednesday. “The end markets are starting to soften a little bit. But at the same time, the equipment sector is completely sold out and will be for the foreseeable future.”
ASML, which exclusively develops the equipment needed to make the most advanced chips, is now gazing at lead times for new machines of over 18 months, the company’s investor relations vice president, Skip Miller said. Its prior generation of tools, which are used to develop all but the most advanced chips, now has a lead time of more than a year.
“It’s just the reality of the fact that we have this still-continued gap in 2023, where demand, we’ve talked about being in the order of 40% above the supply line,” he added.
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