Top US semiconductor makers crushed by one thing after another in 2022 after mind-boggling bubble in 2020 and 2021


Nvidia -66% from high, AMD -64%, Intel -63%, Marvell Technologies -57%, Micron -48%.

By Wolf Richter for WOLF STREET:

America’s semiconductor giants that make the most advanced chips – and by extension semiconductor equipment makers – have been plagued with a host of issues this year, on top of each other, and their actions have been crushed, with Nvidia down 66% from peak, AMD down 64%, Intel down 63% from its April 2021 high and 66% from its all-time high in August 2000 (the 22-year buy-and-hold glories), Marvell Technologies down 57%, Micron down 48%, Applied Materials down 53%. They issued profit warnings, starting in the spring – with the latest batch released last week when AMD, which makes PC processors, and Samsung, the world’s biggest memory chipmaker, reported results that pointed to an even deeper level than expected. slowdown for advanced chips.

On top of all that, on Friday the White House, with bipartisan support, announced new restrictions on these companies in their dealings with China. Friday was tough for those stocks, and today so far is still tough. For example, Nvidia, the largest US chipmaker by market capitalization, was down 12% in the two days to early afternoon today.

The mind-boggling bubble in these stocks in 2020 and 2021 is unraveling. Nvidia Shares [NVDA] are back to where they were in August 2020. Between February 2020 and the November 2021 peak, they exploded by 360%. And this – I repeat because this is what this is – a staggering gain is now unfolding. Stocks have plunged so much since November that the 12% drop over the past two days is barely visible (data from YCharts):

The new restrictions on these companies in their dealings with China, which the White House announced on Friday, add to a host of other issues that have boiled over all year.

There has been the collapse in demand for cutting-edge processors used in crypto-mining rigs. Demand crashed after crypto prices started plunging in November 2021, which took all the fun out of crypto mining, and crypto miners went into survival mode and reduced their purchases of crypto mining platforms. Nvidia warned against this from earlier this year.

Then there was the downturn in the PC and laptop sector after the meteoric boom of the pandemic, when people shifted to working from home and learning from home, and they, their businesses and their schools had to buy all kinds of electronic equipment. . When that shopping boom ended, chipmakers that make advanced processors and memory chips for laptops and PCs took a hit. That slowdown continued into the third quarter, when PC and laptop shipments fell 15% from the boom of a year ago, according to International Data Corporation today. But beware: there were even more PCs and laptops delivered in Q3 than before the pandemic! It’s just that the boom is gone.

Global smartphone shipments started to decline year-over-year in Q4 2021 and continued to decline year-over-year in Q1 and Q2 2022, and ominous omens are coming out all over the world. ‘industry.

There’s been a litany of profit warnings from chipmakers this year for these reasons and more.

All of this comes even as cheap, low-end and high-end semiconductors and microcontrollers used in automotive components continue to be plagued by shortages and continue to hamper global automotive production. In other words, there’s a glut of high-end chips and a shortage of cheap products from aging chip factories that companies had no incentive to invest in because there weren’t many money in it.

The Philadelphia Stock Exchange Semiconductor Index [SOX] is down 3.9% so far, after falling 6.1% on Friday; and it is down 44% from its January 5 high.

Friday’s restrictions imposed by the White House on U.S. semiconductor manufacturers and semiconductor equipment makers in their dealings with China followed a series of restrictions imposed on them previously, but they are by far the most comprehensive to date. They demand that these American companies obtain licenses to export advanced semiconductor manufacturing equipment and state-of-the-art semiconductors that are typically used in artificial intelligence, supercomputing, and modern weapons systems.

“We believe that certain advanced computing capabilities that rely on American chips, software, tools and technology are powering the [Chinese] military modernization, including the development of weapons of mass destruction,” which “poses serious national security risks,” a senior administration official told the Wall Street Journal.

These new restrictions go hand-in-hand with the $50 billion grants that Congress recently passed that chipmakers will get for setting up chipmaking facilities in the United States, the goal being to decouple the China’s entire high-tech supply chain, to bring semiconductor manufacturing back to the United States and halt the process of US dependence on China for semiconductors .

Intel [INTC], the second-largest U.S. chipmaker by market capitalization after Nvidia, never recovered to its all-time high of $75 per share 22 years ago in August 2000, and is now down 66% from the. Since its recent peak in April 2021, it has fallen 63% (data from YCharts):

Advanced micro-systems [AMD] is down 64% from its peak in November 2021:

Applied material [AMAT] is down 53% from its peak in January this year:

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