Semiconductor Companies are Seeing Slower Sales in June

[TheLostSwede]

Based on a report from IC Insights, it appears that the demand for semiconductors and memory is starting to slow down. The slowdown is industry wide, with most major players having seen a reduction in sales in June compared to May. Although the report is focused on Taiwanes semiconductor companies, it also mentions Micron, who is expecting a slowdown in the third quarter of this year. Micron is reportedly expecting a drop in sales by as much as 17 percent, although this past quarter the company saw an increase in sales by 11 percent compared to the previous quarter, or 19 percent compared to last year, so it could simply be that the market is starting to normalise.

As for the Taiwanese semiconductor companies, TSMC saw a reduction in sales of five percent in June, although its competitor UMC saw an increase of two percent. Two other Taiwanese foundries, Powerchip and Vanguard, saw a decrease of four percent and an increase of three percent respectively, which shows that the foundry businesses are seeing change based on the type of chips they make. Apart from Winbond and Macronix, the other four companies in the report saw a decrease in sales by anything between two and 26 percent. Novatek, a manufacturer of semiconductors for the display industry saw the biggest dip in sales, with memory manufacturer Nanya seeing a drop of 16 percent. It should be pointed out that Novatek saw an increase in sales of 78 percent during the pandemic, which suggests their customers might not be seeing the same demand for their end products as they did over the past two years. For now, this could just be a slowdown over the summer months, when demand is usually quite low, but it could also be an indication of a return to a more normalised market.



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[Bomby569]

We are all going to pay for all that extra investment that will sit idle if the global economic crisis lasts too long.

 

[TheLostSwede]

We are all going to pay for all that extra investment that will sit idle if the global economic crisis lasts too long.

Pay less you mean?

 

[Bomby569]

Pay less you mean?

idk about that. Investments like the ones made cost a lot of money and with less sales, they have to get their money back somehow.
Quarters must show profit, these are all public companies. CEO's get fired, investors lose money if they don't do something.
It's not like you have alternatives to buy somewhere else, it's basically dominated by a few companies and in some cases it's actually only 2 and in some cases just one company supplying the market. Prices are what they want them to be. It's not like you can go elsewhere for your silicon needs

And i now there were subsidies from governments but i doubt it covers even a fraction of the global investment.

 

[DeathtoGnomes]

idk about that. Investments like the ones made cost a lot of money and with less sales, they have to get their money back somehow.
Quarters must show profit, these are all public companies. CEO's get fired, investors lose money if they don't do something.
It's not like you have alternatives to buy somewhere else, it's basically dominated by a few companies and in some cases it's actually only 2 and in some cases just one company supplying the market. Prices are what they want them to be. It's not like you can go elsewhere for your silicon needs

And i now there were subsidies from governments but i doubt it covers even a fraction of the global investment.

Just because there is an expected reduction in sales, only means lower profit margins. They'd still be operating in the black by a significant amount. 17% reduction in sales doesnt mean as much to smaller foundries when compared to TSMC current quarterly profits. I doubt this would even affect the stock market prices.

 

[TheLostSwede]

idk about that. Investments like the ones made cost a lot of money and with less sales, they have to get their money back somehow.
Quarters must show profit, these are all public companies. CEO's get fired, investors lose money if they don't do something.
It's not like you have alternatives to buy somewhere else, it's basically dominated by a few companies and in some cases it's actually only 2 and in some cases just one company supplying the market. Prices are what they want them to be. It's not like you can go elsewhere for your silicon needs

And i now there were subsidies from governments but i doubt it covers even a fraction of the global investment.

So you expect all these companies to go bust in six months time just because demand is down?
Not going to happen and the strive for perpetual profit needs to stop, yesterday. It's wreaking havoc with the world.

Just because there is an expected reduction in sales, only means lower profit margins. They'd still be operating in the black by a significant amount. 17% reduction in sales doesnt mean as much to smaller foundries when compared to TSMC current quarterly profits. I doubt this would even affect the stock market prices.

TSMC's share price has already dropped, in a pre-emptive move by some investors, so I guess they knew what was coming.

 

[DeathtoGnomes]

TSMC's share price has already dropped, in a pre-emptive move by some investors, so I guess they knew what was coming.

That would mean insider trading, but... I think shareholders get to see earning reports before its publicly released.

 

[64K]

We all knew this was coming. Due to the Pandemic and people being stuck at home they were buying more PCs and consoles. There is just less demand now that the stimulus money is running out and people are going back to work. Everyone also knew that inflation was coming so people are becoming reluctant to buy things that they don't really need. It isn't insider trading with investors. They are just reacting to the obvious market trend.

Crypto value has taken a big hit so new video card sales are down. Nvidia is already rumored to scale back on wafers they plan to buy for next gen GPUs. I expect AMD will follow suit.

 

[TheLostSwede]

That would mean insider trading, but... I think shareholders get to see earning reports before its publicly released.

Unlikely, as it started early last quarter.

 

[Bomby569]

Just because there is an expected reduction in sales, only means lower profit margins. They'd still be operating in the black by a significant amount. 17% reduction in sales doesnt mean as much to smaller foundries when compared to TSMC current quarterly profits. I doubt this would even affect the stock market prices.

i'm sure you don't invest in the stock market. Trust me this will drop share price for sure, that's how the market works, every quarter everyone expects higher profits and there is no excuses or exceptions

 

[DeathtoGnomes]

i'm sure you don't invest in the stock market. Trust me this will drop share price for sure, that's how the market works, every quarter everyone expects higher profits and there is no excuses or exceptions

I do invest, you are still correct, the market trend is sliding.

 

[TheLostSwede]

i'm sure you don't invest in the stock market. Trust me this will drop share price for sure, that's how the market works, every quarter everyone expects higher profits and there is no excuses or exceptions

And that's how insane the world has gone. How can investors expect constantly higher profits in perpetuity? And if the profit increase is only a few millions, the share price still tumbles, it has to be billions on top of billions for investors to be happy.

 

[Bomby569]

And that's how insane the world has gone. How can investors expect constantly higher profits in perpetuity? And if the profit increase is only a few millions, the share price still tumbles, it has to be billions on top of billions for investors to be happy.

there was a great article in the past days about it, you are obviously right, expecting eternal growth is unrealistic, but it's how our world works, i don't make the rules.

But you also have to see the other side, the money we are talking about is not all from Bezos or big banks or speculations, there is a lot of money from pensions, of small investors, etc and no one wants to lose money. It's a badly designed system that kind of works because we don't have a better alternative, that's how i would put it.

 

[TheLostSwede]

there was a great article in the past days about it, you are obviously right, expecting eternal growth is unrealistic, but it's how our world works, i don't make the rules.

But you also have to see the other side, the money we are talking about is not all from Bezos or big banks or speculations, there is a lot of money from pensions, of small investors, etc and no one wants to lose money. It's a badly designed system that kind of works because we don't have a better alternative, that's how i would put it.

Never said you made the rules, but we've lived in a fairly long stretch of prosperity based on something that wasn't going to last and now it seems like everyone is in chock, because the world changed.

Indeed, it's the little guys that are losing their money, as other people use their money to gamble with. What happens when those pension funds are gone? What are people going to live on when they retire?

We're way off topic here though.

 

[TheDeeGee]

Who would have thpught after jacking up the prices

 

[phanbuey]

That would mean insider trading, but... I think shareholders get to see earning reports before its publicly released.

They also get a bunch of research in upstream/downstream industries (distributors, raw materials suppliers etc.) so they have a pretty good idea what's going on even before the company reports anything.