Chipmakers Forecast Sharp Drop In Demand

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Micron Technology’s forecast on Thursday, which predicts much worse-than-expected sales for the current quarter, sent chip stocks around the world plunging on Friday. Besides Micron, several other chip manufacturers have pointed to a possible decline in demand for chip products.

The expected decline in demand for chip products is driven by several factors, in particular, fervent inflation, which is forcing companies to cut spending.

Shares of Taiwan’s TSMC and MediaTek, Dutch chip gear maker ASML, Franco-Italian company STMicroelectronics and Germany’s Infineon all fell on Friday.

In addition to soaring global inflation across the world causing consumers to tighten spending, China COVID-19 lockdown is also having an impact on demand, leading to a decline in sales of smartphones and personal computers.

Despite the bleak outlook, Micron executives said they were confident about what demand for their chips would be in the long run. Industry analysts also claimed there was still a lot of demand for chips used in electric vehicles, 5G and high-speed computing.

The COVID-19 pandemic forced many people to work from home, leading to an increase in demand for technology products. However, semiconductors, which are a core component of every technology product, were limited in supply and could not keep up with demand.

The sources for this piece include an article in Reuters.

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