Why Memory-chip Makers are Losing Profits? Explain Experts

Published  January 31, 2023   0
S Staff

"We’ve seen extraordinary measures within the memory market. It's at levels that we haven’t seen in 25 years"

The memory chips or the chipset industry is extremely well-known for its popularity and demand. But, over the past two years, things have changed. Now, there is an amalgamation of more diversified management and the young market for its products such as cloud services and 5G technology would ensure that the companies will provide a good earning. The US$160 billion memory chip sector over the past one year was suffering the most. Because of increasing demand for chips from various industries, there is now a glut of chips in the warehouses, product prices have escalated, and customers are decreasing their orders.

Now, there are geopolitical tensions in this industry. The EU has joined the strategy of the US to weaken China’s industry and to deprive it of leading the global semiconductor market. As per an exclusive report of South China Morning Post, The unprecedented crisis isn’t just wiping out cash at industry leaders SK Hynix Inc and Micron Technology Inc, but also destabilizing their suppliers, denting Asian economies that rely on tech exports, and forcing the few remaining memory players to form alliances or even consider mergers

Already, Samsung Electronics Co and its rivals are losing money on every chip they produce. Their collective operating losses are projected to hit a record US$5 billion this year. Inventories – a critical indicator of demand for memory chips – have more than tripled to record levels, reaching three to four months’ worth of supply. Lam CEO Tim Archer said on a call with investors, “We’ve seen extraordinary measures within the memory market. It's at levels that we haven’t seen in 25 years.”

According to the experts, it is always intricate for the memory manufacturer to tackle the spikes in demand. Now, it take years to set-up a new factory and also huge amounts of money, and therefore, it is very difficult to get the accurate timing.