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.