Ukraine conflict, Chinese Covid shutdowns could delay memory chip recovery
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Anyone looking for the market for memory chips to improve before the first half of 2022 is over better just cool their jets and stay patient for a while longer.
That's the assessment of the state of the DRAM memory market from Citi analyst Peter Lee, who said that factors such the war between Russia and Ukraine, and new Covid-related lockdowns in some of China's tech-manufacturing regions, should cause any sector turnaround to be postponed until at least the second half of the year.
Lee said that industry checks over the last week suggest that because weak demand from mobile device and PC makers, "overall memory demand has turned bearish". Among the main reasons Lee gave for his opinion was the "geopolitical tension" caused by the conflict between Russia and Ukraine. Lee said that while the war hasn't yet had a meaningful impact on worldwide demand for memory chips, the war has led many potential chip customers to take a "wait and watch" approach with regards to opening up their checkbooks.
Lee also the shutdowns around the city of Shenzhen due to a rise in Covid cases in the area has added to a sense of uncertainty about the memory chip market. Lee said expects there to be "potential memory demand weakness" if Shenzhen and other manufacturing areas keep plants idled for a prolonged time.
Despite the possible impact of the Chinese shutdowns, memory chip giant Micron Technology (NASDAQ:MU) saw its shares climb almost 4% on Tuesday.
Lee's take on memory chips came a day after Citi analyst Christopher Danely issued a grim view of semiconductors, and called the market "a den of bears" at the present time.