![]() In other words, there is a glut in high-end chips, and a shortage in the cheap stuff coming out of aging chip plants that companies weren’t motivated to invest in because there isn’t a lot of money in it. There has been a litany of earnings warnings from chipmakers this year for these and a slew of other reasons.Īll this comes even as cheap, low-end, tailing-edge semiconductors and microcontrollers used in automotive components continue to be dogged by shortages, and continue to hamper global auto production. Global smartphone shipment started declining on a year-over-year basis in Q4 2021, and have continued to decline year-over-year in Q1 and Q2 2022, and there are bad omens coming out of the industry from all over the place. But note: there were still more PCs and laptops shipped in Q3 than before the pandemic! It’s just that the boom vanished. This downturn continued in Q3, when shipments of PCs and laptops fell by 15% from the boom a year ago, according to the International Data Corporation today. When this buying boom ended, chipmakers that make advanced processors and memory chips for laptops and PCs took a hit. CAKE MANIA 3 CAKE OR DEATH PCThen there was the down-turn in the PC and laptop business after the blistering boom during the pandemic, when folks switched to working from home and learning at home, and they, their companies, and their schools had to buy all sorts of electronic equipment. Nvidia has warned about this starting earlier this year. Demand collapsed after crypto prices started plunging in November 2021, which took all the fun out of crypto mining, and crypto miners switched to survival mode and slashed their purchases of crypto mining rigs. There was the collapse in demand for cutting-edge processors used in crypto mining rigs. The new restrictions on these companies in their dealings with China, that the White House announced on Friday, came on top of a slew of other issues that had been boiling over all year. The shares have plunged so hard since November that the 12% drop over the past two days is barely visible (data by YCharts): And that – I’ll repeat it because that’s what it is – mind-boggling gain is now getting unwound. Between February 2020 and the peak in November 2021, they exploded by 360%. Nvidia shares are back where they’d first been in August 2020. The mind-boggling bubble in these stocks during 20 is now getting unwound. For example, Nvidia, the largest US chipmaker by market cap, lost 12% over those two days through early afternoon today. Friday was harsh for those stocks, and today so far is still harsh. On top of all this, on Friday the White House, with bi-partisan support, announced new restrictions on these companies in their dealings with China. They’ve issued earnings warnings, starting in the spring – with the most recent batch out last week when AMD, which makes processors for PCs, and Samsung, the world’s largest memory chipmaker, reported results that pointed at an even deeper-than-feared slowdown for advanced chips. The US semiconductor giants that make the most advanced chips – and by extension semiconductor equipment makers – have been hounded by a multitude of problems this year, one layered on top of the other, and their stocks have gotten crushed, with Nvidia down 66% from the peak, AMD down 64%, Intel down 63% from its high in April 2021 and 66% from its all-time high in August 2000 (the glories of 22 years of buy-and-hold), Marvell Technologies down 57%, Micron down 48%, Applied Materials down 53%. Nvidia -66% from the high, AMD -64%, Intel -63%, Marvell Technologies -57%, Micron -48%. ![]()
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