Macronix International Co (旺宏電子) yesterday said it has vague visibility for next year due to a memorychip industry downcycle that is driven primarily by surging inflation, escalating geopolitical tensions and an energy crisis resulting from the Ukraine war.
The world’s biggest NOR flash memorychip maker said the situation is different from previous downcycles, which were driven by supply-demand dynamics.
During the 40-year history of the industry, overcapacity and excessive investment have played a major role in driving such cycles, Macronix chairman Miin Wu (吳敏求) told reporters on the sidelines of a technology forum hosted by National Cheng Kung University in Tainan.
Photo: Ritchie B. Tongo, EPA-EFE
The latest slump differs from previous ones, as the world’s major memorychip makers have been disciplined in expanding capacity in the past few years to avoid causing a downturn, Wu said.
The ongoing slump is caused by sluggish demand for electronics, spurred by consumers being unwilling to spend on nonessential items as they expect larger energy bills as Europe is trying to wean itself off Russian energy exports over Moscow’s invasion of Ukraine, Wu said.
That has led to excessive inventories, he added.
Even though supply chain inventories have come down significantly, it is still unclear when demand would pick up, he said.
With external uncertainties building up, “it is almost impossible to make a forecast for next year,” Wu said.
In Asia, geopolitical tensions are also escalating across the Taiwan Strait and on the Korean Peninsula, raising customers’ concern about Macronix’s capacity concentrated in Taiwan, Wu said.
It is not easy to diversify manufacturing sites overseas, given higher manufacturing costs and lower efficiency, he said.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s biggest contractor chipmaker, has more than 80 percent of its capacity in Taiwan, even though it has been expanding to the US and Japan, Wu said.
Geopolitical issues go beyond private businesses’ abilities to address, he said.
During the memorychip downcycles, Macronix is stepping up its research and development efforts to prepare for when the tide turns, Wu said.
Taiwanese companies might benefit from the US-China trade dispute in the short term as US companies are sourcing more from Taiwanese manufacturers.
Washington’s curbs on semiconductors, and chipmaking equipment and software exports to China would prevent the country from advancing its semiconductor capability, he said.
It might take 20 more years for China to catch up, he said.
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