Growing trade tensions between the U.S. and China, coupled with nagging concerns about the Chinese economy have rattled confidence in some of the industry’s key players. Soft iPhone sales, along with a deceleration in cryptocurrency mining ventures, further fed investor anxiety surrounding weakened demand.
Looking ahead, Credit Suisse’s Nigam said investors should focus on supply-side issues within the sector, with Micron, SK Hynix and Samsung all signalling a reduction in capital expenditure.
“Based on the current (capital expenditure) guidance from all three main memory makers, you are looking at a underlying supply growth which will not be more than 15 percent,” Nigam said. “Demand growth, even in a reasonably bearish scenario, will probably be well ahead of that.”
As a result, he said, the discussion in the sector could be moving from “current inventory concerns and sharp (average selling price) concerns to concerns around likely shortages … before the year is out.”
— Reuters, along with CNBC’s Maggie Fitzgerald and J.R. Reed, contributed to this report.
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