Back to the complete issue
Monday, 4 July 2022

The boomerang of chip inflation hits manufacturers

Is the global chip shortage finally over? The global chip shortage — one of the biggest legacy pains of the covid-era — may be subsiding, as a number of major manufacturers, including Intel and Nvidia are warning of “rockier months ahead,” with inflation being cited as a major contributor to declining demand. Intel, whose 1Q2022 revenues fell 7% y-o-y, is expecting a tougher 2H2022, with CFO David Zinsner declaring that the rest of the year will get “a lot noisier,” according to the Wall Street Journal. “The industry demand environment has weakened,” with PC and smartphone sales declining, Micron Technologies CEO Sanjay Mehrotra said in a sales outlook statement.

The pendulum swings: It is perhaps ironic that the boom chipmakers have seen since the pandemic began is now coming back to bite them, as the resulting inflation has slowed down the sales of electronics. The decline in consumer electronics spending came in hand-in-hand with a decline in crypto as a result of global economic turbulence after two years of solid growth.

Could we be getting a reprieve? Egypt had been hit hard by the global chip shortage, with prices here jumping 50% y-o-y in 2021. With a number of industries (particularly automotive) being hard hit, this “rocky” 2H2022 for chip manufacturers may prove a welcome lifeline.


China’s rainy season does wonders for fossil fuel energy usage: In an accidental “W” for the environment, China’s extended rainy season this year may have depressed demand for fossil-fuel energy this year, as the country increases its dependence on hydropower. Hydropower generation until the end of May jumped 18% y-o-y, thanks to rainwater filling reservoirs along the Yangtze River to elevate production, according to data from the US Energy Information Administration cited by Bloomberg. The cooling summer temperatures led to a drop in consumption of 15% in May, saving around 4.6 mn tons of coal.

NASA is going back to the moon: NASA’s microwave oven-sized Capstone satellite successfully broke from its orbit around the Earth yesterday heading towards the moon, AP reported. It will take the satellite, launched last week, about four months to reach the moon. If successful, the satellite would deliver important information ahead of the space agency’s bid to send astronauts back to the moon.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.