Major Technology Companies of Intel Corp., Nvidia Corp., and Micron Technology Inc. have recently published their income statements. Also, they gave a forecast regarding the supply and demand in the microchip market. These reports raise concerns that supply will outpace demand in the future.
Unfortunately, real things are a little more complicated. The activities of the above companies are mainly concentrated in the field of personal computers. During the pandemic, high demand for PCs used for remote work really created a deficit in the industry. However, as most restrictions are lifted and people return to offices and schools, they no longer need an additional computer at home.
At the same time, companies manufacturing communication equipment that is also used in other areas are experiencing difficulties in producing the necessary number of chips for their customers. For example, Cisco Systems Inc stated that they still do not have enough components to meet demand. They predict that these challenges will continue until 2023.
The shares of chip companies have fallen sharply recently due to concerns about oversupply. But NXP Semiconductors NV and STMicroelectronics NV continue to see strong demand. Analog Devices Inc., a manufacturer of chips used in vehicles and industrial equipment, posted 72% revenue growth in the worst quarter of this year.
It's too early to be afraid of too many chips on the market. Demand will remain at current levels for at least the next few quarters.