Citigroup warned on Tuesday that the semiconductor industry was entering its worst slump in a decade, predicting that the chip sector could drop another 25%.

While many analysts blamed a sharp drop in PC and smartphone sales due to the recession, they pointed to continued strength in the auto and industrial sectors as reasons for optimism. Citi, however, isn’t seeing the same positives, arguing that these strong sectors are already showing signs of weakness ahead.

“We also see early signs of correction in the automotive and industrial end markets, and we continue to believe the semiconductor industry is entering its worst downturn in a decade given the recession and rising inventories,” noted Citi, executives at Micron Technology and Analog Devices. The cancellation of orders from the automotive and industrial sectors has been disclosed in recent weeks.

SOX constituents that have fallen the most this year include Nvidia and Marvell Technology. NV shares are down 48% this year, and Marvell is down 45%.

In fact, in response to such a warning, the industry is currently performing. NV’s previous results showed that the net profit of the game business fell sharply, which was due to the decline in user demand, which led to the rapid decline in graphics card sales. In fact, the current situation in the entire PC industry is similar. Everyone’s needs are weak.

According to foreign media reports, the current situation of the memory chip market is not optimistic. Some research institutions predict that the prices of NAND flash memory and DRAM are both declining, and the market oversupply will intensify next year.

DIGITIMES once reported that industry sources revealed that the price of NAND flash memory will further decline in the second half of 2022, as suppliers are under increasing pressure to deal with excess inventory.

The sources pointed out that NAND flash memory chip suppliers are now facing four to five months of inventory. In the second half of this year, chip prices will drop rapidly, with quarterly price declines reaching nearly 20%.

In addition, the sources also pointed out that inventories of SSDs are piling up throughout the PC supply chain. Brand manufacturers such as Asus Computer have maintained high inventories since the second quarter and continued to adjust orders for SSDs and other components downward.

As for the smartphone market, many mobile phone manufacturers have been cutting orders this year, mainly because the industry is sluggish, the number of replacements is decreasing, and the global economy is not ideal.

Source: Shanghai KINMACHI New Material Technology organized from the Internet

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