Samsung To Cut Chip Production as Profits Plunge by 96% (theguardian.com) 47
Samsung Electronics will cut back on chip production, as it faces a sharp decline in global demand for semiconductors that has sent prices plunging. From a report: The world's biggest memory chip maker said it would make a "meaningful" cut to chip output after sales dropped sharply and it flagged a 96% drop in first-quarter profits, worse than expected. The fellow South Korean firm SK Hynix and Micron Technology of the US have also reduced production. "Samsung talking about production cuts is evidence of how bad the current slump really is," said Greg Roh, the head of research at Hyundai Motor Securities.
Smartphone and personal computer makers ramped up purchases of chips during the Covid-19 pandemic, when demand for consumer electronics soared as people were stuck at home during lockdowns. This led to a global chip shortage. However, demand has waned as consumers cut back on bigger purchases amid the cost of living crisis, with food and energy bills soaring. Samsung said demand had dropped because of a weaker world economy and companies buying fewer chips as they run down their inventories. "We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured," the company said, referring to customers with sufficient inventories.
Smartphone and personal computer makers ramped up purchases of chips during the Covid-19 pandemic, when demand for consumer electronics soared as people were stuck at home during lockdowns. This led to a global chip shortage. However, demand has waned as consumers cut back on bigger purchases amid the cost of living crisis, with food and energy bills soaring. Samsung said demand had dropped because of a weaker world economy and companies buying fewer chips as they run down their inventories. "We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured," the company said, referring to customers with sufficient inventories.
Self fulfilling prophecy (Score:4, Insightful)
Since companies are forced by shareholders to think only of the short term share price, by scaling back production they are trying to increase prices. Increased prices will reduce demand. And it will spiral out of control resulting in a recession or depression. These companies are monopolies, so when they scale back they know nobody else can fill in the void and be cheaper.
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Except that the principle you're describing is a natural law that exists in all living beings. Supply reacts to demand on a delay. Even in microbes.
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That is a bad argument for justifying anything at all. Nature is typically our enemy, and while we can learn from it, we should make an effort to do better.
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I would point out that we are part of Nature which is not to say we can't be our own enemy.
“Nature is not our enemy, to be raped and conquered. Nature is ourselves, to be cherished and explored.”
Terence McKenna
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99% of nature doesn't care about any individual or his survival. In order of caring about a person being alive .. I'd venture it's your dog, your family, your friends, a random assortment of humanistic humans, and finally your cat (as long as you maintain regular food supply). 99.9% of the rest of nature really doesn't give a shit about about any human.
That kind of ignores human agency & intellect (Score:5, Insightful)
We stopped maintaining our system of capitalism. It's not a natural system, it's a man made one. Like a car. What happens to your car if you stop doing your oil changes? What happens if you don't do them for 40 years?
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I understand that Marxists are far more denialist about natural laws and theory of evolution than Christian creationists as your belief system fundamentally requires dismissing those. It's how we got things like Lyshenkoism and tens of millions of deaths it caused.
But just because you don't believe in those things doesn't mean that they're not real.
Re:Self fulfilling prophecy (Score:4, Insightful)
Supply and demand is not natural law. The "law of supply and demand" is an observed pattern of interaction between sellers and buyers-- both of which are intelligent actors/reactors in a shared society. If it were purely natural, the extreme demand for chips would compel existing companies to continue producing and encourage others to get into the business. The reality that this move is based on demand for investor profits-- something wholly external to natural patterns.
Re:Self fulfilling prophecy (Score:5, Insightful)
Supply and demand is not natural law.
Yes, it is. You can literally see it at work in nature. When there's less of a resource, access to that resource becomes more contested.
However, complex economic systems are not natural, and therefore laws of nature can be ignored, overridden, or perverted depending on circumstances. Artificial scarcity can be created. The idea that economies follow natural laws exclusively is an absurd pretense.
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It's actually the exact opposite. Small, simple economic systems are not natural, because we have enough ability to actually bend them to our will. And so being humans, the only animal on the planet who's primary adaptation mechanism to environment is partial modification of environment, we adapt those simple systems to ourselves.
Complex, large economic systems are far less malleable through human intervention, and so they are far closer to natural state of things. We still try to bend them so there's less
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More acorns this year means more squirrels next year.
Fewer acorns this year means fewer squirrels next year.
An observable occurrence spanning many decades. It probably means "Supply and demand IS natural law".
Which law school did you go to? Maybe a refund would be appropriate!
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October 2022 - "Samsung Has a Plan to End the Chip Shortage" - Samsung is aiming to “triple its production capacity by 2027.”
April 2023 - "Samsung To Cut Chip Production as Profits Plunge 96%"
Insert LOL and Poop emojis here.
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Since companies are forced by shareholders to think only of the short term share price, by scaling back production they are trying to increase prices.
This has zero to do with short term. When demand has dropped to the point where you're making literally almost no profit then there's no point in keeping production going. This has nothing to do with shareholders or short term thinking.
You sound like one of those "we make a loss on every unit sold but make up for it in volume" kind of people. That doesn't work. The supply and demand curve has always been a tool where *both* curves move to keep the price point at an equilibrium. And these kinds of market act
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If you price your items with a large profit margin, you will sell less of that product. That's their play here .. to increase the price of their product. They can get away with it because they have a monopoly. There are no existing players in the market who can offer the same product for a lower price. It is short term thinking, because when you make large profit margins, competition will emerge. Others will try to sell chips at a lower price and in the long term that makes high profit margins unsustainable
I love it when a plan comes together! (Score:2)
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"everytime a new one comes out." based on what, precisely? Besides talking, or in this case, writing, out of the anterior lobes of your posterior.
Oh, the irony (Score:5, Funny)
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The car manufacturers often want chips on cheap, aging process tech. Phones tend to use recent process nodes. You can't necessarily get both from the same fab.
Go convince some automakers to put their chips on 3GAE or 3GAP or similar. Not happening.
Re:Oh, the irony (Score:5, Insightful)
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Exactly. Automotive grade is a specification that components must meet before manufacturers will use them.
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Sometimes they do want older process tech if that means chips that run within higher target voltage ranges.
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I would have thought the cost of a chip on a newer node will not be too much of a deal breaker on a car which costs 20k or more, compared to a 1k or lower priced mobile phone.
It should be harder to squeeze in a 2000 bucks CPU on a 1000 bucks device compared to a vehicle which costs 20k.
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I would have thought the cost of a chip on a newer node will not be too much of a deal breaker on a car which costs 20k or more, compared to a 1k or lower priced mobile phone.
The issue is not necessarily the cost of the final product. The issue is what the manufacturer is willing to pay per chip. Car manufacturers are not willing to pay what smart phone makers are willing to pay per chip mainly because these chips might be made on 20 year old lines.
Because of the older lines, there are far more fabs and increased competition. With newer nodes there are basically 2 fabs right now: TSMC or Samsung. Even if car manufacturers could get the price they wanted on a newer node, they
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That is their *stated* position. However,
a) There are certified automotive processes down to 5nm.
b) They got cheap production by buying the marginal capacity that CPU production wasn't using, but they eventually they consumed all the volume at those nodes as CPUs moved on.
The only choices are to pay the fully allocated cost to increase volume at the older nodes or they need to pay the NRE to shift to a process where they can get cheap marginal capacity again. Car manufacturers decided to do neither.
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a) There are certified automotive processes down to 5nm.
Citation needed.
They got cheap production by buying the marginal capacity that CPU production wasn't using, but they eventually they consumed all the volume at those nodes as CPUs moved on.
Citation needed. What excess capacity did TSMC have on their 7nm, 5nm, or 3nm lines? I can assure you that there is no excess capacity as AMD, Apple, Nvidia would buy out any excess capacity immediately.
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Car manufacturers: we can't get enough chips! Phone manufacturers: no one is buying our phones, we need fewer chips! Samsung: we see no opportunity here. SHUT. IT. DOWN. The assclowns never cease to amaze.
1) the chips are different which means retooling at a minimum for each fab. 2) the price each customer is willing pay will be VERY different with car manufacturers paying a lot less per chip. 3) The amount of chips each customer wants is also VERY different as a phone manufacturers want millions and car manufacturers will be ordering in the tens of thousands. 4) the car manufacturers will require lot more testing and certification as a matter of safety.
So in effect you are asking Samsung to retool their fab
Some (Score:2)
While the overall point of your post is correct, I want to correct a few things:
1. Car manufacturers also want "millions" of chips, not "tens of thousands". For one, every car these days tends to have a full cell phone in them. It's how they report back to the manufacturer, enable various infotainment and safety features(like automatic accident reporting), etc...
Forbes says, depending on how you measure it, the number is between 1k and 3k, depending on the exact definition you use. [forbes.com]
Looking around, measuri
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Ummm. That seems really off - at least to an American. Every one of my friends has a car. I don't know anyone without a car. One friend collects cars and he has 6 (although most of those collectibles have no chips in them).
But this number doesn't even seem like an average! Most of the (non-dense-urban) USA there is no public transportation - so it is have a car or don't go to the grocery store.
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I was attempting to abstract out a bit for the rest of the world.
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I remember reading that due to the early(relative) introduction of chips, busses, and everything else, that car electronics work oddly by modern thinking.
I can't speak to the programming, but none of the higher level stuff is at all inscrutable by modern standards. The only way in which car electronics seem weird by modern standards is that they have less buses. A lot of components get long home runs back to whatever module ultimately controls them because using a bus would make them less reliable. Sometimes it is downright antiquated, though. For example my 1998 Audi A8 had four wire climate servos, meaning they were dumb devices. All they were saving was s
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At the other end of the spectrum is Chrysler-Jeep whose CANbus implementation is so shit that anybody can hack into the infotainment system
Hmm, did that come from Chrysler or Fiat?
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The types of chips car manufactures want are not the type Samsung produce for phones. You're right, there's no opportunity here. There's just a potential for a lot of expense by Samsung to make almost no profit in the car industry by providing them with outdated process nodes with no future.
The irony here is you think they are assclowns but you clearly have no idea what is going on in this industry.
Samsung could have (Score:1)
Samsung could have had a really cool niche market with their phones to compete directly with the google "Pure Android" experience. Unfortunately they kept crapping stuff up.
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Samsung could have had a really cool niche market with their phones to compete directly with the google "Pure Android" experience. Unfortunately they kept crapping stuff up.
Hear, hear. Their hardware tends to be top-notch, but their software uniformly sucks. And, to add insult to injury, they load tons of it in their phones, and make it practically impossible to remove.
ISSI (Score:1)
I have two shifts running pick & places at my company and we can't get boards out fast enough - but parts availability still remains our #1 limiting factor.
Clickbait headline trick? (Score:1)
Indeed! The "96%" looks bad, but it only means they are slightly profitable instead of very profitable. Readers got 96'd.
High inventory is their own fault (Score:4, Interesting)
Samsung has been at war, purposefully over-producing memory and flooding the market, to hurt Micron. That's what they get for being a dick.
Wait for another year ... (Score:1)