|
|
Prices for computer memory chips, which skyrocketed during the COVID crisis and its aftermath, fell 11 percent during this year’s second quarter compared to a year earlier, the first such drop in two years, market research firm TrendForce reported.
Memory chips are used in virtually every electronic device and make up about 28 percent of the world’s $595-billion semiconductor industry, The Wall Street Journal said.
Prices should decline further as this year progresses, according to the WSJ.
DRAM chips make up about 60 percent of the market for memory chips. Sales are expected to fall 21 percent during this year’s third quarter, the WSJ reported, while sales of NAND flash memory devices will slump 18 percent.
COVID-era demand for all things electronic sent chip prices soaring and created a shortage.
Companies that use chips in their products have scaled back production to accommodate reduced chip supplies.
Those changes are giving chip makers time to catch up with back orders.
However, the shifts also are denting the chip-maker’s financial performance.
Samsung, the world’s chief producer of memory chips, has projected a drop in second-quarter revenue this year, following three consecutive quarters of record sales.
Micron, the third largest memory chip maker, recently issued financial guidance distinctly below analysts’ forecasts.
Early this year, memory chip makers held prices steady, expecting the market to rebound in the year’s second half, TrendForce research director Avril Wu told the WSJ.
“Now it’s clear that demand will be negative” through 2022, she said.
Companies making other kinds of chips also foresee a downturn.
Intel, which mainly makes processing chips, recently told analysts that the second half of this year has become less predictable and that the company will adjust its spending accordingly.
Nvidia, a maker of graphics cards, said that slowdowns in crypto mining and the sale of game consoles likely will shrink its revenues this year.
TREND FORECAST: Now, in a post-COVID economy, consumer spending has been shifting from goods to services, as we reported in “Consumers Switching Spending Habits. What Does it Mean?” (8 Feb 2022). And the combination of near-record inflation and rising interest rates which will push nations into recession, consumer spending will be further curtailed.