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Financial figures show semiconductor market weakness

Market news |
By Nick Flaherty


A raft of financial figures this quarter are showing the softening of the semiconductor market after two years of chip shortages.

Renesas Electronics pointed to a weakening market in the coming Q4 as the fall in the PC and smartphone market spreads to other sectors and the cost of power hits its fabs.

US chip maker Texas Instruments also sees lower figures in Q4.

TI reported Q3 revenue of $5.24bn, up 1% on the previous quarter and up 13% year on year, but warned of the impending decline. “During the quarter we experienced expected weakness in personal electronics and expanding weakness across industrial,” said Rich Templeton, TI’s chairman, president and CEO. “TI’s fourth quarter outlook is for revenue in the range of $4.40bn to $4.80bn,” he added. This would be a fall from the year on year figure of $4.83bn.

Korean memory chip maker sk Hynix also saw sales and profits reduced QoQ due to decreasing demand and price of memory chips amid worsening macroeconomic environment worldwide. It is cutting its investment in fab capacity by half next year as a result.

The Q3 figure of KRW10,983bn ($7.77bn) was down 20.5% on the previous quarter and 7% down on the same quarter last year.

Despite improving cost competitiveness by increasing yield and market share for the latest 1anm DRAM and 176-layer 4D NAND, operating profit also decreased due to greater price drop than cost reduction.

“The semiconductor memory industry is facing an unprecedented deterioration in market conditions as uncertainties in the business environment continued. The deterioration occurred as the shipments of PCs and smartphone manufacturers, which are major buyers of memory chips, have decreased,” said the company.

However, it expects the demand for memory chips in datacentre servers to continue to grow in the mid- to long-term perspective, as hyperscalers continue their investment to meet the increasing scale of industries such as artificial intelligence (AI), big data and metaverse.

Last month US memory chip maker Micron also highlighted the fall of the memory market with revenue of $6.64bn in Q4, versus $8.64bn for the prior quarter and $8.27bn for the same period last year. It also announced it would scale back its investment in fab capacity.

The biggest fall is likely to be from Intel’s results later today.

The consensus estimate for revenues are expected to be $15.49 billion, down 19.3% from Q3 2021 but up slightly from the Q2 figure of $15.3bn, which was itself down 22% year over year.

However the IPO of Intel’s Mobileye subsidiary comes at an opportune time, which is why there was a significant push for its to go ahead. The stock debuted at $21 yesterday, significantly lower than expected, but saw a 30% increase in its first day of trading. As Intel still owns a majority of the stock this will help shore up the parent company’s valuation.

www.ti.com; www.intel.com

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