Some analysts are now suggesting that our long-term ship shortage could be blunted by other market trends.
We have been reporting for months on the colossal and spectacular shortage of microprocessors caused by myriad reasons: trade conflict, coronavirus and lower domestic production in the U.S., to name a few.
This morning, a Reuters team composed of Jane Lanhee Lee, Chavi Mehta and Noel Randewich writes about how we may finally be seeing a reversal of sorts, with firms like Nvidia and AMD getting downgraded, while stakeholders lower markup on some types of chips.
Among the market factors indicated are lower smartphone sales, as well as lower sales of GPUs for crypto mining after recent Ethereum updates.
“GPU prices are still being sold at a premium, but a smaller one,” the group writes. “Susquehanna analyst Christopher Rolland earlier this month said that the markup over manufacturer suggested retail price or MSRP has fallen to 41% from 77%. Graphics chips and hardware news site 3DCenter, which tracks graphic chip prices in Europe, reported that the price of AMD’s Radeon RX6000 and Nvidia’s GeForce RTX30, both used for gaming, dropped steadily to less than 20% above MSRP from 80% at the start of the year. Still, recent Reuters checks found that Nvidia’s GeForce graphics cards remained largely out of stock at retailers like BestBuy and Newegg Commerce.”
Other indicators, the authors note, are resident in the Philadelphia Semiconductor Index (SOX).
Started in 1993, the index tracks a collection of semiconductor equities.
Some ETFs also build on those types of values.
“The SOX is a closely watched index for investors interested in technology chip stocks,” writes Lucas Downey at Investopedia. “Options on the index are actively traded. Investors interested in investing in the index’s components can look into exchange traded funds (ETFs).”
Track chip production and other numbers to understand where this part of the tech industry is going in 2022.