in 2020 the demand for electronics skyrocketed. Lockdowns, closures and other restrictions caused by the pandemic have forced workers and students to continue working from home. Of course, not everyone had the necessary equipment, which explains the great boom in demand.
However, as time went by and the restrictions gradually lifted, the demand for such products began to decline. Unfortunately for many companies, record profits and sales eventually translated into large inventories in warehouses. Executives from several chip makers and OEMs discussed their thoughts on the current situation they face.
Micron CEO Sanjay Mehrotra says the company’s chip volume is “well above our target level” and that Micron is so affected by the sharp decline in demand that it recently cut about 10% of its strength total work. HP CEO Enrique Lores doesn’t expect the industry’s woes to go away for at least the next couple of quarters, but he believes there are signs they could start to resolve themselves soon.
Both Intel and AMD executives also reveal the problems their companies are facing. In October, Intel CEO Pat Gelsinger noted, “It’s hard to see good news on the horizon.” Intel reported a 15% decline in sales and a 59% decline in gross profit in 2022. in Q3 compared to 2021 in Q3.
AMD has also suffered from a lack of demand in recent months, as the AM5 platform and the new Zen 4 processors have not been bought very well, which has caused the prices of these processors to drop sharply. In an effort to clean up excess inventory, AMD has begun shipping fewer chips than demand. However, Lisa Su says that because of this, OEMs using AMD processors in pre-built desktops or laptops have unfortunately been unable to replenish their inventory to the expected level.
PC makers aren’t the only ones seeing a huge drop in demand, as sales in the smartphone sector have also declined in recent months. Qualcomm, which makes the Snapdragon processors used in many phones, recently lowered its expectations due to lower demand for high-end smartphones.
For now, companies will have to find ways to cope with the sudden drop in demand. Despite all these setbacks, many leaders still hope that by 2030, chip sales will double to more than $1 trillion, especially as the United States starts promoting the localization of chip manufacturing.
