Computer chips face toilet paper hoarding moment as shortage turns to glut
FILE PHOTO: Micron Technology's solid-state drive for data center customers is presented at a product launch event in San Francisco, U.S., October 24, 2019. REUTERS/Stephen Nellis
A supply chain crisis triggered by the global pandemic deprived makers of PCs and smartphones to cars of computer chips needed to make their products.
All that suddenly changed over three weeks from late May to June, as high inflation, China’s latest COVID lockdown, and the war in Ukraine dampened consumer spending, especially on PCs and smartphones, reports Reuters.
Chip shortages turned into a glut in some sectors, taking Wall Street by surprise. By late June, memory chip firm Micron Technology Inc MU.O said it would reduce production. The market reversal caught Micron off guard, admitted Chief Business Officer Sumit Sadana. Read full story
As US chip earnings reporting season kicks off later this month, TechInsights’ chip economist Dan Hutcheson warned of more bad news following Micron’s grim forecast. “Micron kind of plowed the ground, with their honesty,” he said.
Worries about an industry downturn have slammed chip stocks, with the Philadelphia Semiconductor index .SOX tumbling 35% so far in 2022, far more than the S&P 500’s .SPX 19% loss.
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