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Chip industry faces downturn as shortage turns to glut

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Companies that were desperate for chips are having a ‘toilet-paper moment', with big implications for producers

Companies that were desperate for chips are having a ‘toilet-paper moment’, with big implications for producersMicron's honesty 'ploughed the ground', says analyst. Picture: STEPHEN NELLIS/REUTERS

Chip shortages turned into a glut in some sectors, taking Wall Street by surprise. By late June, memory chip firm Micron Technology said it would reduce production. The market reversal caught Micron off guard, admitted chief business officer Sumit Sadana. Before that, “just in time” manufacturing was the norm for fiscally conservative companies, which ordered parts as close to production time as possible to avoid excess inventory, reduce warehouse capacity and cut upfront spending.

Nvidia, the design giant whose graphic chips are used for gaming and mining cryptocurrency, could see “another shoe drop” as prices continue to fall, worsened by the recent cryptocurrency market crash, Gerra said. “In power management, we’re going gangbusters,” said an executive of another global chipmaker who asked not to be identified.

 

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