Chip Inventories Swell as Consumers Buy Fewer Gadgets (wsj.com) 56
The world is now awash in chips. The oversupply marks a sharp turnaround from a global shortage during two years of supercharged demand. From a report: Consumer appetite for electronics has weakened against a backdrop of rising interest rates, a falling stock market and recession fears. Chip inventories are swelling, mirroring what is happening in the wider economy where retailers are stuck with goods on their shelves and producers of a range of products in high demand early in the pandemic now face a glut. What is happening in chips amounts to good news for consumers who can get their hands on products from washing machines to laptops faster, and sometimes more cheaply, than a year ago. For chip makers, the shift has triggered a wave of job cuts and reduction in capital spending as companies try to restore profitability levels that have eroded in recent months.
Chip inventory levels are "well above our target level," said Sanjay Mehrotra, chief executive of memory maker Micron as the company on Thursday missed Wall Street earnings projections, gave a subdued outlook and said it would cut about 10% of its workforce. Lead times between chip orders and deliveries that swelled early in the pandemic have fallen in recent months, according to an analysis by Susquehanna International Group. Inventory levels, typically measured in days, are at their highest levels in more than a decade, or about 40 days above the median for the chip industry and its supply chain, according to a UBS analysis. Much of what is playing out for chip makers is illustrated by the reversal in fortunes that gadget makers have experienced over recent months. HP and Dell, two of the largest PC makers, say their products that flew off the shelves early in the pandemic now are sitting there for longer.
Chip inventory levels are "well above our target level," said Sanjay Mehrotra, chief executive of memory maker Micron as the company on Thursday missed Wall Street earnings projections, gave a subdued outlook and said it would cut about 10% of its workforce. Lead times between chip orders and deliveries that swelled early in the pandemic have fallen in recent months, according to an analysis by Susquehanna International Group. Inventory levels, typically measured in days, are at their highest levels in more than a decade, or about 40 days above the median for the chip industry and its supply chain, according to a UBS analysis. Much of what is playing out for chip makers is illustrated by the reversal in fortunes that gadget makers have experienced over recent months. HP and Dell, two of the largest PC makers, say their products that flew off the shelves early in the pandemic now are sitting there for longer.
Well, it's about damn time! (Score:4, Informative)
Money is tight, modern products are usually crap and mostly have bling value only and quite frankly, some manufacturers seem to have an entitlement problem.
I think it's high time the market found a new balance.
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I think it's high time the market found a new balance.
It won't. It'll revert to the balance pre-covid as soon as consumer spending abilities normalise again. You may say that items only have bling value, but then you ignore that people voluntarily bought that bling.
Normal is having disposable income. What we have now isn't normal and will likely change before the market balances into any stable plateau.
Paywall not easy to avoid... (Score:1)
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Re: Paywall not easy to avoid... (Score:2)
Re: Paywall not easy to avoid... (Score:2)
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Re: Paywall not easy to avoid... (Score:2)
My own gadgets are pending... (Score:2, Insightful)
As sad as that comment is, it's the best candidate for FP I've seen in this discussion. But you aren't missing anything important on that website. Unless you feel a need to confirm your "elite" status by buying permission.
I'm actually in the market for a number of electronic gadgets. I don't like online shopping for various reasons, so I've been in the stores quite a bit over the last few months. But they are so unhelpful these years that I haven't bought much. Maybe they should stop blaming the consumers f
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Less disposable income means fewer toys (Score:5, Insightful)
If the rent goes up, food prices go up, and the cost of getting to work increases, you won't be getting that new iPhone. Another set of discussions is the root causes of why the prices went up.
Where's my Nobel Prize?
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If the rent goes up, food prices go up, and the cost of getting to work increases, you won't be getting that new iPhone. Another set of discussions is the root causes of why the prices went up.
Where's my Nobel Prize?
I've bought more new gadgets this year than for the last 3 (new laptop, new phone and new tablet, which replaced a Nexus 7 from 2013). Then again I've been planning for economic issues since 2019 (due to Brexit, which is paying "dividends" as we speak).
This is news to me (Score:2)
In my tech industry we still cannot get our chips for the next year to year and a half.
This is Micron, not industry-wide (Score:5, Interesting)
Micron is trying to defend its poor planning by suggesting that the manufacturer over-stock issue is industry-wide.
I'm in the industry, and that's not what I see.
Bigger (and Micron is big) suppliers such as ADI, TI, Microchip used the delivery shortages a year and more ago to sign up key customers into committed deliveries, so there won't be a cliff of cancellations.
Again, largely just a Micron problem.
Lastly, can editors please avoid simplistic crap terminology like "computer chips". Micro make memories, not CPUs. /rant
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Again, largely just a Micron problem
Has to be specifically them. Some of our embedded solution depends (contractually) on memory form ISSI and it's still middle 2023 for the delivery for order.
Re: This is Micron, not industry-wide (Score:2)
You could still blame Micron for planning poorly, and wouldn't be technically wrong but it would
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You could still blame Micron's planning, but that would be naive. These kind of cycles are endemic to the memory market, and have been for many decades. So a better question is, why does the memo
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Microchips are interchangeable just like college degrees. Engineering / polysci / gender studies / journalism it doesn't matter what you study all that matters is you got a degree because they're all equal. Ask any manager and they will tell you, you can apply any degree to any job industry. The same is true with microchips. You just program the chips after they're made -- especially ASIC or Ambiguous Shiftable Integrated Controllers. /s
The con job (Score:3)
Be forewarned. If you are a small manufacturer, your suppliers are likely to try to convince you that lead times will be 6 to 12 months and availability will be severely constrained in an effort to convince you to order stuff now. It's likely B.S. If their inventories are swelling, they aren't selling stuff, and you're not selling stuff either. Companies are starting to realize that the just-in-time business model isn't sustainable when black swans float in so they are fobbing off their overhead onto their customers until the end consumer stops buying which rebounds on the OEMs.
Re: The con job (Score:2)
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I've seen "54 week" lead times on Digikey and others. But with 1000's of chips in stock it seems likely that more chips exist in the market for suppliers savvy enough to find them. A word that is pretty much the opposite of JIT automakers.
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A more likely problem is that many of the current "chips" in stock (meaning high end stuff) have likely been manufatured with expectation of the elevated pandemic pricing on the consumer end. Which means that every major stage of manufacturing was more expensive than normal.
This is easily visible in much of consumer electronics, where prices of IT toys and tools stay at close to pandemic levels even though demand is low and storage is near full. Likely because selling them at what market can bear would mean
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Octopart is very handy. But in the past two years, I've spent far more time being a purchasing agent than I had been in the past.
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The whole effect this chip shortage has been having on "the little guy" is something that seems to be completely left out of the various articles and public conversations. At that end of the market, having to plan your whole production runs so far in advance (when you don't even know real demand yet) can be a huge cost burden. It also makes R&D difficult when you can't even source the parts to build those initial prototypes, and have confidence that you can then get those same parts in production quan
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There was an article in the WSJ recently about this. I've been an OEM for about 18 years now and I used to be able to order custom components and get a 14-week lead time. Now that lead time is 35 weeks (I'm still waiting for an order I placed back in April, btw). Lack of availability also borks potential sales. I had a chance at a sizeable order back in March but they needed delivery by April. Trouble was that key suppliers had no product to sell me because their supplier had no product to sell them.
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I call "Just In Time" anti-insurance.
It saves money, just like not paying for insurance saves you money.
Price gouging (Score:5, Interesting)
If you price gouge your customers, you shouldn't be surprised when the demand dries up. The pandemic, combined with eye-watering prices for electronics, has resulted in shifting habits. We're now *making* art and music, rather than just *consuming* it.
This isn't just a matter of finding a different point on the demand/price curve. The price gouging of the past year has changed consumer habits, which means the demand isn't going to rebound. I don't think consumer electronics will go away completely, but they're not going to be the cash cow for retailers they once were.
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If you price gouge your customers
Bah, there was no significant price gouging, just the normal operation of supply and demand. Demand exceeded supply because of the pandemic, in two ways. Pandemic responses put big crimps in the supply chain, in both production and transport. So a lot less stuff was available. Meanwhile, government pandemic response flooded the market with trillions in extra cash (IMO, this was the right choice, though Biden's third round was probably unnecessary and perhaps even foolish), at the same time that consumers ha
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So explain then why corporate profits are UP.
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We're now *making* art and music, rather than just *consuming* it.
I'm glad for you, but most people have not started doing that.
Consumers strike back (Score:2)
Good. Maybe manufactures will start paying attention to what actual consumers want now, like:
* Phones with 8000mAH batteries that are at least semi straightforward to replace.
* Phones with a half centimeter (give it take) to and bottom (in portrait orientation) bezel and forward-facing stereo (in landscape orientation) speakers as good as the ones we had circa 2016. Side/rear-firing speakers SUCK.
* No glass backs
* If they can't have a proper 3.5mm audio jack for us to use to get a root shell using a level s
New stuff is pointless (Score:2)
Buy a new phone for the bigger GBs, better screen and faster CPU/GPU ? Why? Any performance will be soaked up by arse-headed copypaste web 'designers' desperately hiding any useful information which otherwise might make it onto the page.
Ditto Laptops. Why should I be the one paying for better hardware for spyware to run on? An old PC is just as slow and irritating to use as a brand new one, thanks to the 20 billion layers of spooks/advertisers/telemetry/incompetence, so save your cash.
8GB Pi Still $202 (Score:4, Informative)
IoT (Score:3)
The internet of things rollout has greatly slowed as well. Most adopters of that kind of technology (smart bulbs, smart plugs, smart thermostats, etc) have already got what they want, and the devices last many years. So that initial surge as people decided to automate various things has really slowed down. Same with other consumer devices like big televisions - most people now have what they want, and they last a long time.
There just isn't any Big New Thing happening right now (although Zuckerberg really, really wants that to be VR) to push sales of tech gadgets.
Bullwhip effect (Score:2)
This is a common problem known in economic circles as the Bullwhip Effect. [wikipedia.org] Many industries have seen this over the past couple of years, but I hope that this starts lining up. The uncertainty of this time has become troublesome to say the least.
So it's time (Score:2)
To hit AliExpress quickly while the prices are low and before COVID shuts down the gadget factory.
Did someone tell Drobo this news? (Score:1)
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I'd probably not trust Drobo due to their bankruptcy [appleinsider.com]. 10+ years ago, they were a very strong provider, one of the few ways to get desktop RAID, and models that didn't just do USB, but even iSCSI.
Now, the market is crammed with NAS vendors. Synology, QNAP, Terramaster, and if you want to roll your own, TrueNAS and OpenMediaVault.
Synology and QNAP, for the most part, use Bog-standard Linux md-raid for their heavy lifting, so if the NAS dies, you can plug the drives in, stitch them together, and be able to p
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Car prices are waaay up over the past year for all car companies, or did you not notice? Maybe you will on your next car insuran
Amazing revelation: People buy less when costly (Score:1)
It's almost like when stuff gets too expensive, demand drops.
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I think that it's also a factor of saturation.
Why buy a new cellphone if the old one is still working, and the new ones can't advertise being able to do anything new that the old one couldn't, that actually interests the customer enough to justify the price?
I mean, remember all the apple lawsuits and such where they'd cripple the older phones deliberately in order to try to get people to upgrade? Things like chopping out battery capacity, slowing operating speeds, so new phones would at least be faster and