- In recent weeks, major chip manufacturers Micron Technology, Nvidia, Intel and Advanced Micro Devices have warned of weaker export orders.
- South Korea’s technology exports slipped in July for the first time in over two years, with memory chips leading the falls adding to signs of trouble for a global economy facing headwinds from geopolitical risks and higher borrowing costs.
During the pandemic, demand for chips saw supply chains seize up, affecting everything from electric kettles to electric cars, and manufacturers couldn’t scramble fast enough to make up for the shortfall in semiconductors essential to modern day living.
But Russia’s invasion of Ukraine and rising interest rates have faded tech demand, against a backdrop of overall slowing global demand for goods and painting a darkening economic picture.
North Asia’s high-tech exporters, which historically serve as a bellwether for the global economy, are now expressing concern over rapidly slowing semiconductor demand, a proxy for consumption in a plethora of other goods.
In recent weeks, major chip manufacturers Micron Technology (-1.30%), Nvidia (-0.80%), Intel (-0.41%) and Advanced Micro Devices (-0.80%) have warned of weaker export orders.
Meanwhile, South Korean behemoths Samsung Electronics (-0.33%) and SK Hynix (-0.10%), two of the world’s biggest contract chipmakers, have signaled plans to dial back investment outlays, while across the East China Sea, the world’s biggest contract chipmaker Taiwan Semiconductor Manufacturing indicated a similar expectation.
At the height of pandemic demand, global shortages of graphics cards that power everything from cryptocurrency mining rigs to gaming PCs, and the basic semiconductors that power any form of connected device, saw chipmakers announce a slew of expansion and investment initiatives, to cope with the burgeoning demand.
But chip foundries are notoriously expensive to build and take years to generate a return on investment.
A weakening in demand for chips would make any chipmaker think twice about spending the billions of dollars it takes to set up a foundry, especially if it’s without massive government subsidies, tax breaks and incentives.
In the US$500 billion global semiconductor market, memory chips appear the most vulnerable and responsive to a downturn.
South Korea’s technology exports slipped in July for the first time in over two years, with memory chips leading the falls adding to signs of trouble for a global economy facing headwinds from geopolitical risks and higher borrowing costs as such exports have long correlated with global trade.
