The Chip Industry Is In Trouble. Let’s See Why

Sep 19, 2022

The Chip Industry Is In Trouble. Let’s See Why

For semiconductor producers, the months follow one another and appear to be the same.

There is a never-ending loop of bad news for these businesses, whose processors power practically everything of the modern stuff we use in our everyday lives, whether phones, laptops, PCs, video games, televisions, electrical gadgets, vehicles, and so on.

Microprocessors and graphics cards are also required by businesses in their day-to-day operations, whether for a data center or the cloud.

Fears of a harsh landing in the economy owing to aggressive interest rate rises by the Federal Reserve to combat inflation at its highest in 40 years have been a concern for Nvidia, Advanced Micro Devices, Intel, Micron, and Qualcomm for months.

What Is Going On With Stocks

As a result, the stock market performance of these companies since the beginning of September has been predictably terrible. Nvidia shares have declined by more than 13% since the end of August, while AMD shares have fallen by 9.2% since the end of August, despite having recovered strongly after the publication of second-quarter earnings. Over the same time frame, Intel shares declined 8.2%, Micron shares fell 5.1%, and Qualcomm shares fell 5.5%.

Investors are concerned that if the Fed continues to raise interest rates at such a rapid and considerable rate, it will precipitate a recession. In the event of a recession, people and companies will dramatically cut back on their expenditures. These arbitrations will mostly affect technical goods and service acquisitions. For example, a customer who is regular replacing phones on a regular basis will most likely postpone the next purchase in order to preserve money in the case of a severe hit due to economic uncertainty.

And the latest inflation figures suggest that it is not abating, giving investors hope that the central bank will boost interest rates even more during its two-day monetary meeting on September 20-21.

Core consumer prices in the United States increased 0.6% last month, driven not just by rising rents but also by intensifying pressures across a wide variety of items and services. According to data from the Bureau of Labor Statistics, pressures in the world's largest economy have yet to peak.

"Today's CPI report indicates that the United States has a major inflation problem," former Secretary Treasury Larry Summers tweeted. He is one observer who believes the Fed should accelerate its monetary tightening.

Nvidia - The Issues Don't End

The semiconductor industry is further hindered by the ongoing trade war between the United States and China. According to Reuters, the Biden administration is set to officially impose an export prohibition on powerful AI accelerators to China by AMD, Nvidia, and others. The export of Nvidia's A100 and H100 AI accelerators, as well as AMD's MI250X GPUs, was prohibited by the embargo, which was announced late last month. Nvidia has warned that this limitation might cost them $400 million in revenue in the following quarter.

The money earned by semiconductors supplied to the crypto business might also fall in the next months since Ethereum, the second most popular platform behind Bitcoin, will update its transaction validation method on September 15. The new transaction validation mechanism necessitates fewer computers, which necessitates fewer graphics cards and less sophisticated semiconductors.

This last issue is more special to Nvidia, whose sales of gaming processors are already being hampered by China's anti-Covid-19 lockdowns.

The World Semiconductor Trade Statistics, a non-profit organization that records shipments, has reduced its sales forecast for 2022 to a 13.9% increase from 16.3% before. Global semiconductor sales are now estimated to reach $633 billion in 2022. Sales will only grow by 4.6% in 2023.

However, industry sources think that the present dip is just transitory since AI and robotics will become increasingly important in the economy in the next few years.

Subscribe Our Newsletter

Traders Believe the Fed Will Ease Policy Soon. Let's Hope They're Mistaken

Milena

Traders Believe the Fed Will Ease Policy Soon. Let’s Hope They’re Mistaken.

A premature change in interest rates may undermine public trust in institutions. Inflation might be the main winner here.

Banks and Finance
European Industry Faces Shrink Or Shut Decisions On Energy Pain
European Industry Faces Shrink Or Shut Decisions On Energy Pain

BASF already suffered losses of 800 million euros this quarter due to high gas prices, and the issue may become worse if the United States and European Union widen sanctions against Russia, which provides over 40% of the EU's natural gas.

Banks and Finance
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Oliver

An Introduction to KYC: What it is and Why it Matters
Security is one of the main aspects of people's well-being. Security control at airports, for example, is not a huge surprise for us since so many people gather in one place to travel. To get on the plane, we need to provide an ID card.

discover
Best High-Yield Savings Accounts For March 2023

Tatma

Best High-Yield Savings Accounts For March 2023

If you have ever dealt with a bank - and I find it hard to think you haven't - you have probably considered opening a savings account to earn passive income over time.

Fintech
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap

    Vitaliy

    Triangle Patterns in Trading: Mastering Ascending, Descending & Symmetrical Strategies for Maximum Profit

    Triangle Patterns in Trading: Ascending, Descending & Symmetrical Guide

    Alexander

    What Is COTI? Payments, Token & Price Prediction

    What is a COTI coin

    Constantine

    Best Copy Trading Software in 2025

    Best Copy Trading Software in 2025

    Alex

    What Is an AI Agent? The Future of Finance Explained

    AI Agent Explained

    Constantine

    How to Start a Liquidity Provider Business?

    How to Start a Liquidity Provider Business

    Constantine

    How to Start a White Label Brokerage?

    How to start a white label brokerage

    Constantine

    How to Start a Multi-Asset Brokerage?

    How to Start a Multi-Asset Brokerage

    Hazem

    Crypto Ransomware – How They Happen and How to Avoid Them

    Crypto ransomware explained

    Constantine

    Best Web3 Browsers in 2025

    Best Web3 Browsers

    Constantine

    Best DAO Projects in 2025

    Best DAO projects in 2025

    Alexander

    Crypto Nodes That Pay: Your 2025 Guide to Top Passive Income Opportunities in Crypto

    crypto nodes that pay

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Pi Network Explained

    Constantine

    Triple Net Lease: Meaning, Benefits, and Strategies Explained

    Triple Net Lease

    Constantine

    Hanging Man Pattern: How to Identify and Trade It Effectively

    Hanging Man Pattern

    Alex

    5 Infinite Banking Mistakes That Could Cost You Thousands

    Infinite Banking Mistakes to Avoid

    Aleksander

    Solana Firedancer: Solving Solana’s Biggest Problems with a New Engine

    Solana Firedancer explained

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained

    Alexander

    How to Scale a Crypto Exchange Business and Stay Competitive

    how to scale crypto exchange business

    Constantine

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.