Chip Makers Singing the Sagging Chip Sales Blues

Chip makers have long been competitive with one another in their rush to create smaller chips with higher capacities. As manufacturers raced to market, they also had to learn how to improve their products while also reducing production costs. Unfortunately, not all companies can sustain a business model that demands precision and lean operations.

In early 2012, Japan’s last big memory chip competitor, Elpida Memory Inc., sought a bailout from its customers. The company reportedly asked 10 customers for a $500 million infusion of cash. This move leaves Korea’s powerhouses, Samsung and Hynix Semiconductor, at the top of the market.

Once a bustling industry with a hungry marketplace, today’s memory chip industry has seen demand for memory chips fall dramatically. Several factors are at play. One, consumers no longer need to replace their PCs as often, not do they feel the need to upgrade memory as often as before. Two, flash memory is becoming more prominent. Today’s consumers, when they’re in the market for a PC, can easily find one with sufficient memory suited for the tasks at hand.

Most U.S. memory chip makers exited the market decades ago with Intel exiting in the 1980s, soon followed by Texas Instruments. They simply couldn’t compete with their Asian competitors.

The last major chip makers are facing financial woes. In addition to a lack of demand, building new factories to make them more competitive has enormous costs. Some companies, such as Samsung, are diversifying into other areas in response. As fewer manufacturers produce memory chips, shortages could result which could in turn spur demand.

What does this mean to the U.S. computer repair industry? Low cost memory is still available, but may disappear as manufacturers struggle to make a profit. It might not be a bad idea to stock your shelves with replacement chips while supplies are plentiful and prices are low.

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