A sharp drop in graphic chip prices could presage an unexpectedly quick ending to a global chip crunch that has crippled manufacturing from smartphones to cars, and the issue will be a central one for companies reporting results this week.
Baird senior analyst Tristan Gerra told Reuters that if electronic companies that buy chips expect prices to drop further, they will cut fat inventories, further cutting purchases -- and pressuring prices.Demand for GPUs may also drop because crypto currency Ethereum is expected to change the way it operates late this summer, reducing the demand for graphics chips that power systems used to mine the cryptocurrency today, analysts say.
But Bank of America said the weakness in the gaming or crypto currency mining segments could be balanced by strength in data center demand for graphic chips and has reaffirmed its “buy” rating for Nvidia., plan multibillion-dollar expansions. “Between all the fab investments and then all the bullishness that the shortage wasn't going to end until 2023, 2024, we said we could see a glut coming,” that extends beyond graphics chips, said TechInsights’ Dan Hutcheson, who has been following chip supply and demand for over 40 years.Reporting by Jane Lanhee Lee in Oakland, Calif.
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