Headline, November 13 2022/ ''' '' CHIP MANUFACTURERS CURB '' '''

''' '' CHIP MANUFACTURERS

 CURB '' '''

SUPPLIES OF SEMICONDUCTORS ARE PILING UP - which could spell good news for consumers but not for industry executives.

A FEW MONTHS AGO - MAKERS OF COMPUTER CHIPS seemed on top of the world. Customers could not get enough of the small slices of silicon, which act as the brains of computers and are needed in just about every device with an on-off switch.

Demand was so strong - and U.S. dependence on a foreign manufacturer so worrying - that Democrats and Republicans agreed in July on a $52 billion subsidy package that included grants to build new chip factories in America. 

U.S.chip makers such as Intel, Micron Technology, Texas Instruments and GlobalFoundries pledged huge expansions in domestic manufacturing, betting on a growing need for their products and the prospects of federal subsidies.

But lately, supply of some semiconductors are piling up, which could spell good news for some consumers but not for industry executives. Their bold investment plans are running into a sudden and unexpected slowdown in consumer demand for electronic gadgets, new U.S. restriction on sales to customers in China, rising inflation and the unusual prospect of a simultaneous shortage of some chips and glut of others.

THAT has left chip makers, which had been looking ahead to immense demand and opportunity, suddenly grappling with immense challenges. Many of the companies now face complex questions about whether and when to step up production, amid uncertainty about how long the current sales slowdown may last.

''Six months ago, I would have said we were in this hypergrowth phase,'' Rene Haas, chief executive of Arm, the British company whose chip technology powers billions of smartphones, said of the broader industry.Now, he said, ''we're in a pause.''

For many consumers, products that were scarce because of chips shortage may start becoming more available though, though not immediately. Automakers, which have struggled to make enough cars because of the lack of chips and other components, said they were getting more but still face some problems.

Prices of smartphones and computers could also fall as chip supplies grow and prices plummet for two types of memory chips they use.

But for now, not everyone is able to get all the chips they need, and prices remain high for many kinds of semiconductors. ''We are still way above prepandemic pricing,'' said Frank Cavallaro, chief executive of A2 Global Electronics and Solutions, a chip distributor.

Fears of a slump, which have clobbered semiconductor stocks this year, are evident in recent earnings announcements from chip makers.

South Korea's SK Hynix on Wednesday reported a 20 percent drop in revenue and said its business of memory chips ''is facing an unprecedented deterioration in market conditions.'' Intel provided more evidence of a downturn in its third-quarter results last Thursday, including a 20 percent drop in revenue and a $664 million charge to cover cost-cutting measures expected to include job cuts.

The Biden administration delivered its own blow this month with sweeping restrictions aimed at hobbling China from using U.S. technology related to chips. The measures restrict sales of some advanced chips to Chinese customers and prevent U.S. companies from helping China develop some kinds of chips.

That hurts semiconductor companies like Nvidia, which makes graphics chips used to run artificial intelligence applications in China and elsewhere.The Silicon Valley company, already suffering from a sharp sales decline for video game applications, recently estimated that the U.S. restrictions would probably reduce revenues in its current quarter by about $400 million.

The restrictions may bite even harder at companies that sell chip-making equipment, which relies heavily in recent years on sales to Chinese factories.

Lam Research, which produces tools that etch silicon wafers to make chips, estimated that the China limitations would reduce its 2023 revenue by $2 billion to $2.5 billion.

''We lost some very profitable customers in the China region, and that's going to persist,'' Doug Bettinger, Lam's chief financial officer, said during an earnings call this month.

The Honour and Serving of the Latest Global Operational Research on Semiconductors, Chips, Markets and Future, continues. The World Students Society thanks author Don Clark.

With respectful dedication to the Scientists, Technologists, Chip manufacturers, and then Students, Professors and Teachers of the world. See Ya all prepare and register for Great Global Elections on The World Students Society - the exclusive ownership of every student in the world : wssciw.blogspot.com and Twitter - !E-WOW! - The Ecosystem 2011 :

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