Economy
Microcircuit market crash? Chip makers fear worst recession in a decade
Microcircuit market crash? Shares of semiconductor makers fell after chipmaker Micron Technology Inc warned of an impending slowdown in demand for its products, raising fears that the entire industry is headed for a painful downturn; Bloomberg writes.
The U.S. Semiconductor Manufacturers’ Index in Philadelphia fell 4.6 percent, and all 30 of its participants were in losses, the biggest drop in the index over the past two months. The situation in Asia was not the best: shares of many companies, from Taiwan Semiconductor Manufacturing to Samsung Electronics, SK Hynix Inc. and Tokyo Electron Ltd. fell there as well.
Investors are increasingly concerned that the industry’s infamous cyclicality could lead to a prolonged downturn after years of widespread shortages that led it to prosperity.
Citigroup Inc. analyst Christopher Danely did a microcircuit market analysis and was unequivocal on the matter:
“We remain confident that we are entering the worst period of decline in semiconductor manufacturing in at least a decade, perhaps since 2001, given the recessionary expectations and the inventory build-up.”
And while the PC market was already in a slump a month ago, there is now a widespread weakening in demand, as Nvidia, Intel and Advanced Micro Devices have issued warnings.
The adjustments in estimates extend not only to sectors dealing directly with consumer demand. but also to other parts of the market, including data centers, manufacturing, and automotive production.
Before the pandemic, the average lead time for chip orders was usually less than 15 weeks; now it’s 27 weeks, causing a lot of companies, such as Toyota Motor Corp and Apple, to lose billions of dollars in sales because they couldn’t get enough chips in time.
But there are also beneficiaries in the market, such as TSMC, which reported 50% revenue growth in July. The Taiwanese company made capital investments, while the U.S. and European governments, China and Japan, used subsidies to boost domestic production capacity.
According to Yasuo Imanaki, chief analyst at Rakuten:
“The surge in demand for smartphones and PCs amid remote work is now clearly waning. And we should be wary of the risks that the adjustment will not be as small as Micron and other companies had hoped just a couple of months ago.”
Recall that Musk previously sold Tesla stock for $6.9 billion.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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