Apart from a surge in demand from customers working in artificial intelligence, demand across all sectors has fallen back this year and a massive oversupply of chips has led to significant operating losses for some of the biggest names in the industry – Samsung and SK Hynix have reported a combined loss of $12bn for the first half of the year.
The big winners are those companies that are delivering chips for artificial intelligence, with production of the high-end chips used to support AI related chips growing strongly.
This chip glut, however, does look like it might be easing according to new figures from tech analysts Canalys. While demand is still falling in terms of both PC and smartphone shipments those falls are significantly lower than in previous quarters. In the June quarter, for example, mobile phone shipments were down 8 per cent compared to 14 per cent in the first quarter.
According to Intel’s CEO Pat Gelsinger while the glut in data centre CPUs will persist until the second half of the year the company sees demand recovering in the fourth quarter.
However, the biggest worry appears to be weak demand in China, the world's biggest chip buyer. Samsung, SK Hynix and Texas Instruments have all been affected by a ‘sluggish’ recovery in end-market demand with results coming in below expectations as orders are cancelled or postponed.
