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Chipmakers Dial Back Investment As More Trouble Looms

Chipmakers in North Asia are dialling back investment as fading demand, rising inflation, and the continuing war in Ukraine brings a new set of challenges to the beleaguered industry.

Research firm Gartner slashed its original 14 per cent revenue growth prediction for the semiconductor industry to just 7.4 per cent in 2022. Gartner predicts this revenue will fall a further 2.5 per cent in 2023.

Samsung and SK Hynix have both signalled plans to dial back investment outlays in semiconductors, while the world’s biggest contract chipmaker Taiwan Semiconductor Manufacturing Co has started cutting costs.

Micron, Nvidia, Intel Corp. and AMD have all reported weaker export orders.

Dynamic random access memory, or DRAM, demand is likely to grow just 8.3 per cent in 2023 – the weakest growth on record, according to TrendForce, while supply will increase 14.1 per cent.

With supply due to outstrip demand, this all points to graver global economic issues. Korean tech exports are often looked upon as a sign of healthy global trade.

Korea’s technology exports fell in July for the first time since the start of the pandemic, with the DRAM chips that Samsung and SK Hynix manufacture leading the drop.

The two Korean companies control two-thirds of the global memory market.

With the US recession tipped for early-to-mid 2023, this situation isn’t likely to correct soon.



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