Chipmakers Struggle With Inventory Buildup On Pandemic Demand Correction

Pandemic recovery, rising interest rates, a falling stock market, and recession fears have weakened consumer appetite for electronics.
Retailers are stuck with goods on their shelves, and producers of products in high demand early in the pandemic battled surplus inventory, the Wall Street Journal reports.
Consumers can avail products from washing machines to laptops faster and sometimes more cheaply than a year ago.
For chip makers, the shift triggered a wave of job cuts and reduced capital spending to restore profitability levels that have eroded in recent months.
Chip inventory levels exceeded way beyond target level, Micron Technology, Inc MU CEO Sanjay Mehrotra said after missing Wall Street earnings projections, gave a subdued outlook and said it would cut about 10% of its workforce.
Leading PC makers HP Inc HPQ and Dell Technologies Inc DELL also remained stuck with excess goods on their shelves compared to a year ago.
Intel Corp INTC, Advanced Micro Devices, Inc AMD, and Nvidia Corp NVDA also expressed their concerns over excess inventory likely to stay elevated.
Micron expected the situation to persist through its fiscal year's first half.
Smartphone sales, too, deteriorated, denting chipmakers' fortunes. Micron, Qualcomm Inc QCOM, Samsung Electronics Co, Ltd SSNLF, and Apple Inc AAPL repeatedly cut their sales projections this year.
However, the industry expected chip sales to double by 2030, surpassing $1 trillion globally. Micron eyed a facility in upstate New York that could cost up to $100 billion, partly funded by U.S. government incentives.
Some chip makers like Lattice Semiconductor Corp LSCC saw the inventory buildup as an opportunity.
Price Action: MU shares traded higher by 0.68% at $50.54 in the premarket on the last check Tuesday.