Graphic Chip Prices Fall Sharply. What Does It Mean For Global Chipset Crisis?

There has been a sharp fall in graphic chip prices that could give way to a likely quick ending to a worldwide chip crisis that has hit manufacturing, smartphones and cars.

There has been an acute demand and supply gap in the chipset industry due to supply chain constraints, Covid-19 and other reasons. Image: Getty

New Delhi: There has been a sharp fall in graphic chip prices that could give way to a likely quick ending to a worldwide chip crisis that has hit manufacturing, smartphones and cars, the media has reported. There has been an acute demand and supply gap in the chipset industry due to supply chain constraints, Covid-19 and other reasons. 

The trigger is a drop in prices of graphics processing units or GPUs, that are the brains of gaming machines and are spreading to other uses. According to Baird senior analyst, Tristan Gerra if electronic companies that buy chips expect prices to drop further, they will cut fat inventories, further cutting purchases -- and pressuring prices, according to a report by news agency Reuters.

The fall in chipset prices can be attributed to decreasing demand from PC and smartphone industries, according to Summit Insights Group analyst Kinngai Chan, who expects the supply of some other chips made on older machines to face over-capacity in the second half of this year, the report added.

Meanwhile, global semiconductor revenue increased 25.1 per cent in 2021 to total $583.5 billion, crossing the $500 billion threshold for the first time, a previous report by Gartner said. Samsung Electronics regained the top spot from Intel for the first time since 2018, with revenue increasing 31.6 per cent in 2021. Its memory revenue grew 34.2 per cent in 2021, in line with the growth rate of the overall memory market.

Intel dropped to the number two osition with 0.5 per cent growth in 2021, delivering the lowest growth rate among the top 25 vendors. Memory was again the best-performing device category, primarily due to increased server deployments by hyperscale cloud providers to satisfy remote working, learning and entertainment needs, as well as a surge in end-market demand for PCs and ultramobile.