Daily Management Review

Slowing Smartphone Sales Being Offset By Chipmakers Through Memory Boost


05/08/2018




Slowing Smartphone Sales Being Offset By Chipmakers Through Memory Boost
The fear that a slowing global smartphone market would impact the global chipmakers in recent months have made investors jittery. However, there is apparent buoyancy in the memory chip industry once against because of demand for more video content from consumers.
 
Despite the slowdown in the volumes of global phone shipment, a new story is developing in the last one month from the financial reports of multiple chipmakers and smartphone markers. There is a growing trend of inserting more memory in the smartphones as the makers put in more chips to meet the demands from consumers.
 
The first quarter report from Apple Inc is a testimony to that trend. The costliest iPhone – the iPhone X was the most in demand for the company in the first quarter of the year, said the Cupertino, California-based company.
 
Concerns have also been eased by better assessments from Samsung Electronics Co Ltd, Qualcomm Inc, and Franco-Italian company STMicroelectronics.
 
Forecast for increasing demand for its “high-density” chips possessing greater processing power and larger storage capacity compared to traditional ones was made last month by Samsung. It is expecting that growth in demand would help the company offset the slowdown in overall smartphone shipments because consumers are apparently ready to shell out more money for smartphones that are faster and hence costlier that allows users ease and storage of videos.
 
“Even as the number of smartphone shipments slow down, each smartphone will contain memory chips with bigger capacity and better performance, which, for memory chip makers, makes up for a slowdown in the number of total smartphones,” said Kim Rok-ho, an analyst at Hana Financial Investment.
 
This partly explains a recent warning by Taiwan Semiconductor Manufacturing Co Ltd (TSMC) of slower sale of smartphone. it is that warning that saw a climb down in the shares of Apple and other chipmakers because of a sell off.
 
Apparently, there has been easing in the larger concerns related to a slowdown in the chip market.
 
There has been a 4.4 percent rise – after falling sharply from its peak in mid-March, in the Philadelphia Semiconductor Index which is an indicator for the health of the global chipmakers. The fall was on concerns about the initial iPhone sales.
 
The global memory chip industry, worth a total of $122 billion, has expanded about 70 per cent in 2017 and continued a trend that began in mid-2016, driven by high growth in smartphone sales as well as in cloud services. Significantly more powerful chips are required for cloud computing because of the huge volumes of data stored and processed.
 
While a fall in price of memory chips is expected to nearly half the speed of growth of the memory-chip industry, for pure-play memory chipmakers such as Micron Technology Inc and SK Hynix, the forecast remains good. While the stocks of Micron have risen by 18 percent, there has bene a 8,5 percent appreciation in the shares of so far this year.
 
(Source:www.reuters.com)






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