South Korean Chip Makers Affected by Slump in Chip Demand

[TheLostSwede]

It's not just TSMC and the other Taiwanese chip makers that are seeing a dip in demand, the Korean chip makers have seen a slump of 15 percent in the past four months, compared to 2021. This is said to be the biggest drop in chip demand since 2009 according to data from Statistics Korea. There's a combination of factors behind the slump in demand, especially when it comes to memory related products, where inventories already are high, combined with inflation and a low demand.

According to the Financial Times, an analyst at JPMorgan in Korea isn't expecting things to improve until 2024 at the earliest. Just like Micron and Kioxia, SK hynix is looking at cutting spending on new fabs and production lines, although as TPU reported earlier this week, Samsung is going its own way, by continuing to invest in new fabs and production lines. Samsung is expected to have a capex of US$37.5 billion this year back in October, although based on the increase in costs, the capex would have increased in the fourth quarter of the year. On the plus side, it seems like the shortage of semiconductors should ease in 2023 and hopefully return to more normal levels.


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[N3M3515]

No more shortage then? or is it on other components?

 

[TheLostSwede]

No more shortage then? or is it on other components?

Obviously a lot depends on the actual chip "design" company, so if there's a shortage of say STM32 MCUs and ST doesn't have its foundry partners make more chips, there will continue to be a shortage.

 

[ThrashZone]

Hi,
If no shortage then one must be manufactured asap
Saturation can happen usually because of retail costs are way to high
Hopefully the buyers market will come around and fix things in due time I personally love a buyers market way more than sellers markets seeing I save more money.

 

[AusWolf]

As long as all the focus is on super-expensive, high-end products in a world where wages are stagnating and people struggle more and more just to heat their homes or buy food, I'm not surprised.

 

[the54thvoid]

Market economics dictate that high demand is met with higher pricing. The reverse is also true. I'm happy demand is falling.

 

[dragontamer5788]

Market economics dictate that high demand is met with higher pricing. The reverse is also true. I'm happy demand is falling.

There's always a danger of boom/bust periods though. Booms cause mania, investments into factories that ultimately are idle and useless during the bust period. Busts cause factories to shut down, job loss... and possibly even deepens the bust.

We're moving forward to challenging economic times. It was inevitable due to disease and war, which forced our supply lines and stressed them severely in unpredictable ways. We needed a boom to make up for all the supplies that were suddenly needed... but now we're entering the (somewhat predictable) bust. No one really knows how deep this bust period will go.

Lets hope for that "soft landing". We'll need all the luck we can get.

 

[evernessince]

There's always a danger of boom/bust periods though. Booms cause mania, investments into factories that ultimately are idle and useless during the bust period. Busts cause factories to shut down, job loss... and possibly even deepens the bust.

We're moving forward to challenging economic times. It was inevitable due to disease and war, which forced our supply lines and stressed them severely in unpredictable ways. We needed a boom to make up for all the supplies that were suddenly needed... but now we're entering the (somewhat predictable) bust. No one really knows how deep this bust period will go.

Lets hope for that "soft landing". We'll need all the luck we can get.

A majority of the "busts" are created by the companies themselves. They jack up prices time and time again and then refuse to lower them, instead preferring to lay people off and reduce supply than sell more units.

These companies took public money all the while manipulating supply, jacking up prices, and now laying off people to further control that supply.

The source of the current world's woes is pure greed. COVID and war and just convenient excuses for them to rake in more cash. They see each disaster as an opportunity to bilk people, truly soulless.

 

[SrKag]

All the big FAB companies are building, that costs. But greedy investors want returns now!!!.. So why be an investor if your not going to wait for a better return then investing for 5 minutes ( which is extremly true!). It can take years for FAB's to build to allow for more sales and sales bring the returns. But you sell 1000 units at $500 in a month where as you sell 100000 units at $250 in a month. $50000 vs $25000000. Providing you have the ablity to keep up, keeping quality at the for front . Demand = sales, sales = profit, profit = investment, investment = returns, returns = sales, rinse and repeat. Sell it low, returns more buyers, more buyers at a lower price gives way to longer term, higher profits and more sustained. But noooo higher cost = fast lower profits now( for those 5 minute investors), as lower number of buyers have free funds to buy at higher price. As you keep prices lower, profit will increase = more employees = more production = more investors = even more sales, this gives more low income buyers the chance to buy with less free funds (this plan is years not tomorow). They just won"t have it this way, as there would be more of an equal ground for all. The rich want more divide between to upper and lower. So prices stay higher and right now prices are exponentially higher as of late. So sales fall, buyers retreat creating the slump. May be long winded but extremely true. Theres and old saying " the rich get richer the poor get poorer". Ranting, yes, but come on, you have to keep money moving to keep the economy moving. Higher prices create the slumps, causing lower sales (PERIOD) and i don't care what market you are in, its the same!

 

[mechtech]

Sigh. Well ya pandemic over. Don’t need double pcs and everything else to work from home so gonna return to prepandemic levels.

I see vehicles still rare though…..

 

[dragontamer5788]

I see vehicles still rare though…..

Prices are elevated, but the last few months have seen the used-car market crash... at least relative to June 2022 prices. We're still elevated compared to 2020 of course, but we're moving in the right direction now.

 

[SOAREVERSOR]

Sigh. Well ya pandemic over. Don’t need double pcs and everything else to work from home so gonna return to prepandemic levels.

I see vehicles still rare though…..

Car companies are going to need to cut production due to work from home. There is no damn reason with that to drive for work or go shopping now that everything shows up at your door. The personal car will go the way of horse drawn buggy in the lives of those of us in our 40s.

 

[mechtech]

Prices are elevated, but the last few months have seen the used-car market crash... at least relative to June 2022 prices. We're still elevated compared to 2020 of course, but we're moving in the right direction now.

View attachment 276857

Things are still ridiculous here in Canada. I check for a base model truck crew cab and 4wd. Didn’t even have cruise control. $60k not including tax!!

 

[Minus Infinity]

Quick raise prices, that will help for sure.

 

[watzupken]

The supposed "sky high demand" that they are not able to keep up is largely due to lockdowns which resulted in individuals and corporates soaking up large amount of PC inventories. So I really don't think this exceptional demand can remain red hot. Especially when prices are not getting cheaper when there is short of supply vs now where there's an oversupply.

In fact, I think this is only the beginning of fab pains given that they have expanded and are still expanding very aggressively. While demand for chip is also contributed by the EV car industry, but most people don't change their cars annually like they do with cell phones.

 

[Readlight]

I wish you all cheaper GB.

 

[Zaqq]

We're moving forward to challenging economic times. It was inevitable due to disease and war, which forced our supply lines and stressed them severely in unpredictable ways. We needed a boom to make up for all the supplies that were suddenly needed... but now we're entering the (somewhat predictable) bust. No one really knows how deep this bust period will go.

You're forgot the decade+ long monetary policy of quantitative easing aka "cheap money for capitalist class" of central bankers... This "correction period" we're living in is pretty much inevitable.

 

[dragontamer5788]

You're forgot the decade+ long monetary policy of quantitative easing aka "cheap money for capitalist class" of central bankers... This "correction period" we're living in is pretty much inevitable.

There's a much simpler reason. One that doesn't require reading crappy doomer blogs from 8 years ago trying to explain today's economic situation.

All Employees, Total Nonfarm

View the number of nonfarm employees in the U.S., who account for approximately 80 percent of the workers who contribute to GDP.

fred.stlouisfed.org

I wonder what caused 22-million workers to leave our economy in 2020.

In contrast, we can see the entire length of 2010 through 2019 and I don't think there's any problems (no inflation problems, or worker problems). Blaming the policies of 2010 or 2014 seems to be a rather insane conclusion when we all know full well what happened in 2020.

Don't get me wrong. We have a frothy, bubbly investor class due to the low interest rates. I'd blame something like the Cryptocoin bubble, as well as the meme-stock problem on low interest rates. But when we look at fundamental attributes of the US economy (ie: workers vs inflation), the statistics are great in the 2010 through 2019 period.

 

[Totally]

No more shortage then? or is it on other components?

Well, they haven't had any flooding, earthquakes, fires, power outages or contamination in while...

 

[stimpy88]

The pigs got greedy at the trough, now the customers are running out of free money, so they will fight over what is left. The stupid ones will put their prices up.