chip industry is spreading. With the oversupply of chip supply and the decline in demand, the days of a number of chip manufacturers are becoming very difficult. Among them, chip giant AMD has recently released a third-quarter earnings warning, causing its stock price to plummet after the market, and dragged down all the chip stocks in the US .
On Thursday local time, AMD issued a public statement that expects revenue in the third quarter to be approximately $5.6 billion, a year-on-year increase of 29%, far lower than the previous estimate of $6.71 billion, which has heightened concerns about the entire chip industry.
After AMD issued a profit warning, it fell about 4.5% to $64.79 after U.S. stocks, while AMD has fallen by nearly 55% so far this year.
was affected by AMD's performance lower than expected and investors' concerns about the chip industry. The stock prices of other chip manufacturers such as Nvidia and Intel also fell by about 3.1% and 2.8% after the U.S. stock market, while Nvidia and Intel's stock prices have fallen by about 56% and 49% respectively this year. Why has the chip industry become a downturn in
?
The entire chip industry is performing sluggishly under the combined effect of slowing demand and increasing inventory.
Consumers are now cutting spending on electronic products due to concerns about the recession and inflation. And after two years of high demand driven by the epidemic, chip manufacturers' inventory is now significantly oversupply. An analyst at Citi warned that the chip industry is entering its worst downturn in 10 years, with poor macroeconomics and continuous cumulative inventory all hurting corporate profits.
consumer chip companies' stock prices "fall"
For consumer chip manufacturers such as AMD, Nvidia and Intel, during the epidemic in the past two years, people have purchased large quantities of smartphones, PCs and cars, but due to supply chain disruptions and delays in production and transportation, the global chip shortage has also become popular.
At that time, many analysts predicted that chip demand would be in short supply for a long time, and chip companies would have to increase production to cope with the "chip shortage". However, this situation has been significantly reversed and has led to a sharp drop in stocks of such chip manufacturers.
As fierce inflation erodes consumers' purchasing power, demand for consumer markets dominated by smartphones and personal computers is slowing down. Meanwhile, rapidly rising interest rates are threatening global economic growth, making businesses more cautious about spending and thus reducing purchases of large electronic products.
NVIDIA, Intel and AMD are all affected by the decrease in demand in the consumer market. According to IDCh data, smartphone shipments are expected to fall 7% in 2022, while PC computers are expected to fall 13% and 3% in 2022 and 2023, respectively.
Regarding the situation where revenue in the third quarter was lower than expected, AMD explained:
This reflects lower than expected customer segment revenue, because the PC market is weaker than expected and the overall PC supply chain has taken major inventory adjustment measures, resulting in a decrease in processor shipments.
Similar to AMD, Nvidia and Intel have previously cut billions of dollars in revenue forecasts.
It is worth mentioning that AMD also said that the third quarter expenses are expected to reach $160 million, mainly for inventory, pricing and other purposes.
In addition, AMD plans to report full third-quarter earnings on November 1, and the company said it does not intend to update any other financial reports before that.
memory chip companies are also under pressure
Recently, news of various major manufacturers cutting orders has been constantly coming, and all companies in the chip industry chain are not feeling well. For example, memory chip manufacturers such as SK Hynix , Micron , and Kioxia are all slowing down production and reducing capital expenditures.
So far this year, the stock prices of memory chip manufacturers such as Samsung Electronics , SK Hynix, and Micron have all fallen sharply, with a drop of 31%, 36% and 49% respectively.
Wall Street News Previous article mentioned that Micron warned that
The future will be more difficult. Because downstream companies are preparing to save food and live through the cold winter, it directly affects the prosperity of upstream OEM factories.
Some media quoted sources as saying that Apple rejected TSMC's OEM price increase requirements, and other major customers of TSMC may follow suit, putting foundries under pressure to modify their pricing strategies next year. However, for small and medium-sized IC design companies, when discussing prices with OEM manufacturers, there are relatively few bargaining chips, and cost pressure will still face challenges in the short term.
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