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Innovation

A semiconductor chip from Intel Corporation (Tom Williams/CQ-Roll Call, Inc via Getty Images)

By Savannah Young Leaders Staff

Savannah Young

Savannah Young

News Writer

Savannah Young is a news writer for Leaders Media. Previously, she was a digital reporter for WATE Channel 6 (ABC)...

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Aug 9, 2022

Businesses Warn of Chip Demand Decline

Despite efforts to boost U.S. made semiconductor chips, businesses warn of declining demand.

Micron Technology Inc., the leading U.S. maker of semiconductors, became the latest chipmaker to declare that demand is falling rapidly. 

Earlier today, the company said that fourth-quarter sales are expected to be low and below its previous guidance to analysts as customers reduce their stockpiles of unused chips. There will be “significant sequential declines in revenue and margins,” Micron said in a regulatory filing. 

The Idaho-based company is the latest to reveal the quick decline in electric component demand. Micron’s announcement follows that of Nvidia Corp. and Intel Corp. and other chipmakers, who reported weak earnings this season.

The majority of the decline  is being felt by companies that make chips for personal computers. Consumer demand for those devices is rapidly slowing as pandemic lockdowns end and household budgets are being cut due to inflation.

Highlighting the quick decline of demand, Micron said orders have fallen since the company last gave an update just over a month ago. Crucially, it’s not just PC makers that are cutting back.

“Compared to our last earnings call, we see further weakening in demand because of adjustments broadening outside of just consumers to other parts of the market including data centers, industrial and automotive,” Micron CEO Sanjay Mehrotra said in an interview with Bloomberg Television.

This news comes after President Biden signed off on The Chips and Science Act that was supposed to boost production of semiconductors in the U.S. The $52-billion stimulus package is designed to make it cheaper for companies to build domestic factories and help counteract the loss of the crucial skill set to Asia.

Not all chipmakers are suffering large declines. Companies with more diversified products are posting earnings that show greater resilience. Globalfounderies Inc., a provider of outsourced chipmaking, gave a more bullish outlook after reporting sales and profit that topped estimates. Revenue in its most recent quarter was $1.99 billion, slightly above Wall Street estimates. Sales in the current period will expand to about $2 billion, reports Bloomberg.

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