Reuters: SEOUL – The beginning of the end of a semiconductor supply glut is being celebrated by global chipmakers, from Intel to Samsung, but the forecast for demand from clients outside the artificial intelligence (AI) industry is still bleak.
Due to a sluggish global economy, high inflation, and rising interest rates, all of the key semiconductor sectors, including smartphones, PCs, and data centers, have seen declines this year.
The result has been an unprecedented oversupply of commodity chips, which has led to a record combined operating loss for the first half of the year of 15.2 trillion won ($12 billion) for the two biggest memory chip manufacturers in the world, Samsung and SK Hynix.
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However, as manufacturing has decreased and the reduction in PC sales has slowed to 11% in recent months, this surplus has begun to alleviate.
According to research company Counterpoint, the smartphone industry is also improving. Cellphone shipments decreased by 8% in the June quarter compared to the first quarter, which was a 14% increase.
SK Hynix’s Woohyun Kim, the company’s chief financial officer, stated during an earnings call this week that “demand is recovering very gradually.”
“The recent improvement in PC shipments has been mainly led by promotions and low-end models, meaning it provided limited impact on chip demand recovery,” he added. He also noted that shipment expectations for PCs and cellphones this year have been revised downward from prior projections.
Even while the market for chips supporting generative AI has grown quickly since OpenAI’s ChatGPT was introduced in late 2017, it still only represents a small portion of overall chip demand, which is limiting business spending on servers.
Pat Gelsinger, the CEO of Intel, stated on Thursday that a server CPU supply glut would last into the second half of the year and that data center chip sales will experience a little decrease in the third
