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Semiconductor glut rewrites the chip story

Jan 30, 2023

By: BlinkX Research Team

One industry which everyone expected to witness record sales and efficient returns was the semiconductor industry; in particular, the memory-chip sector. A more sophisticated technological framework and new tech markets like 5G and cloud services had bookies blindly placing their chips on this industry. Alas, this $160 billion market is suffering a drought, with chips aplenty being hoarded in warehouses as customers cut down on orders and prices trod downhill. The chip story has come full circle in less than 3 years.

Key players like SK Hynix Inc, Micron Technology Inc have been impeded by this unprecedented crisis, and this has tapered the Asian economy, with remaining players having to form consortiums. Samsung Electronics Co, along with the other key players are expecting threefold growth in inventory levels.

This counterbalance between favourable times and unfavourable consequences is by virtue of stochastic market conditions. Consumers have opted for conservative routes, as the world prepares itself for a second recession. In addition, the embargoes on Russian oil have skyrocketed energy prices in the Western bloc, and standards of living have really plummeted; stalling investments on such hi-tech items. 

As a result, Samsung, Hynix and Micron have reduced supply of DRAM (Dynamics Random Access Memory) chips. The market for universal logic gates, NAND gates (the building block of all semiconductor devices), will face dire times, and their recovery, driven by deal talks between Western Digital Corp and Kioxia Holdings will follow suit to the DRAM market recovery.