Temperatures are cooling as more clouds roll in

Andrea Lati

• Order activity for semiconductor equipment tumbled nearly seven points in the second week of June as caution abounds among chipmakers
• All segments turned lower with Memory recording the biggest drop
• Overall activity is still hot as near-term fundamentals for equipment suppliers remain strong
  • The biggest concern for equipment suppliers is not demand; it’s supply as shortages still linger
• Chipmakers have become more cautious about their prospects as more signs of weakness in the consumer markets emerge
• The macro outlook has also become murkier due to the rampant inflation
• The inventory buildup (particularly at the die banks) in the face of ongoing supply chain constraints will likely keep the momentum going for chipmakers in the second half of the year
• The May data from the Taiwanese companies showed a bifurcating environment with Foundries rocketing to new highs and Memory slumping further.
• TechInsights’ Chip Price Performance Index is warning again
  • DRAM slid
  • NAND declined
  • MPUs declined
• Inventories continue to rise