THE OULOOK FOR CHIP MAKERS – SEMICONDUCTOR INDUSTRY

Memory-chip makers enjoyed a two-year bull run but have seen prices fall over the past few months.

It’s projected, however, that after having dropped around 40% from the end of last year, that things in the industry can be expected to be pretty stable this quarter (ref WSJ).  And that prices for NAND chips used for storage might even rise slightly.  The factors for the projected stability include trade difficulties between Japan and Korea as well as a power outage at chip maker Toshiba.  The underlying demand and supply balance, therefore, has improved recently – cutbacks have also assisted in helping to remedy the industry’s oversupply problem.  As a result of recent difficulties, however, capital spending by memory-chip makers is expected to be 20% lower this year.  But other good indicators include the fact that demand from data centers – which have been a major driver of previous booms – has started to come back.  The WSJ reports that expected spending on servers and storage this year has “ticked up” compared with the beginning of the year.  And, the recent pickup in smartphone demand – including sales of iPhone 11 and Samsung’s Galaxy Note 10 are also factors in the improved picture.  The Journal’s Wong is speculating that the worst seems to be over for the memory market, even though it might be another year before full recovery.  Sounds like good news, just about all around, for the industry.

ALL THE MOVING PARTS – industries gain or fail based on how they can make all their organizations’ parts work together.

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