SK Hynix Cuts Outlook as Fragile Economy Stabilizes Demand

In a nutshell: SK Hynix is ​​the latest tech giant to warn of a faltering economy as the possibility of a global recession looms. The world’s largest supplier of DRAM and flash memory chips said memory growth is slowing as inventories continue to rise. Once again, the slowdown in demand for electronic goods after the lockdown boom is cited as an important factor.

Bloomberg writes that SK Hynix posted a 56% increase in second-quarter earnings yesterday, beating analysts’ estimates. But along with a healthy financial report, there was also bad news. Company executives said demand from its core growth areas of PCs, smartphones and servers is slowing down.

Industry analyst IDC earlier this month reported that PC shipments fell 15.3% year-on-year in the second quarter for the second quarter in a row. Smartphone shipments are also declining this year. As such, SK Hynix marketing director Kevin Noh says shipment growth forecasts for the current quarter will be lowered. “Market growth this year will be much lower than we expected earlier this year,” he said.

While the industry does not want to see oversupply, consumers often benefit from such situations. Analyst firm TrendForce reports that consumer SSD prices are expected to fall 3-8% during the third quarter due to oversupply of NAND.

Global economic uncertainty is affecting virtually every tech company as firms slow down hiring, tighten their belts and, in some cases, lay off workforce. Facebook recently began cracking down on low and mid-performing employees, while Google, Microsoft, Seagate, Snap, Twitter, Tesla, Corsair and more are feeling the heat.

However, there are positives in the long run as well. SK Group Chairman Chae Tae Won told President Joe Biden that the group is investing $15 billion to build a cutting-edge packaging and testing facility and support research programs in the US. This comes a week after the Senate moved the CHIPS bill to the next stage. The law will provide $52 billion in funding for the domestic semiconductor industry.

Not all firms predict doom and gloom. The world’s largest chipmaker, TSMC, raised its revenue growth forecast for this year, indicating that demand for electronic goods in some sectors remains strong.

Head credit: KenSoftTX

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