Latest forecast says semiconductor prices will drop; chipmakers to worry about dampened demand

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Analysts are predicting that global semiconductor prices may fall in the coming months.
Not good for South Korean chip giants Samsung and SK hynix.
That projection is based on a slowdown in economic growth, meaning less demand for electronics.
Kim Yeon-seung reports.
Semiconductor prices could slip later this year.
This is bad news for South Korea's chipmakers, like Samsung and SK Hynix, because a dip in chip prices signals dampened demand among consumers.
Market research company Trendforce forecasts that some of the semiconductors that goes into smartphones and PCs may see prices fall up to 8 percent year-on-year in the third quarter.
NAND Flash, a data-storing semiconductor, is to fall by up to 5 percent.
And DRAM, used for short-term memory storage, could fall up to 8 percent later this year.
Soaring prices and sluggish economic growth held back by Russia's invasion of Ukraine have hurt demand for new electronic goods.

"If economic growth slows, consumption slows, which in turn will cut down production. Lower production means lower demand, also for semiconductors."

Also, with China's rigid COVID curbs hurting logistics and consumer spending, Chinese brand smartphones have been slower than usual to leave the shelves.
According to industry analysis firm Counterpoint, global smartphone shipments are expected to fall by three percent this year compared to last year.
This may be a sign of a bigger economic trend, according to one expert.

"I said a recession will start from next year, but it seems like it's starting a little faster than expected. Recession signs are already showing up in semiconductor prices."

Although recession remains a risk, it may be too early to say, because demand can bounce back after a short drop, according to another expert.

"Nobody knows if this price drop will continue, or if it will be temporary. Chip demand comes in a cycle it increases then decreases. But if there's a recession, demand will be slow to recover. "

But some do see a silver lining: the semiconductor supply pinch may be eased as demand recedes.

Kim Yeon-seung, Arirang News

#forecast #semiconductor #chipmaker

2022-06-22, 17:00 (KST)