Global chip stocks plunge after Micron’s (MU) poor forecast, waning demand

July 02, 2022 04:38 AM AEST | By Mridul Gogoi

Global chip stocks plunge after Micron’s (MU) poor forecast, waning demand — Image source: © Rdboes | Megapixl.com

Chip stocks worst sufferers of S&P 500 on Friday

Chip stocks saw the biggest fall on the S&P 500 on Friday. The Philadelphia Semiconductor index (.SOX) plummeted 3.5% after sliding 35% in the first half of the year.

It was a different story during the pandemic. Chipmakers were flooded with big orders from smartphones and personal computers companies during the lockdown as demand soared from people who were working from home.

It was the harvest period for chipmakers during the lockdowns. The acute shortage of chips forced the client companies, including automakers, to cut production, delay shipments, and pay higher prices for key chips. Global executives had even issued warnings about supply chokepoints due to the recent lockdowns in China.

According to research firm Gartner, industry-wide shipments of smartphones to China are likely to contract by 18% this year. Due to the supply chain disruptions, global shipments are likely to shrink by 7%, the research firm said.

Bottom line:

On the other hand, surging inflation across the globe has compelled consumers to cut their expenses, with China’s curbs also slashing demand. This is another reason why sales of smartphones and PCs have declined sharply and affected the chipmakers in the bargain.

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