After a boom and bust, the chip industry is regaining health

The global semiconductor industry is bottoming out, executives say, signaling a rebound in some areas of technology and providing relief for the U.S. government, which is spending billions on expanding chip production.

-  Jiyoung Sohn

In recent weeks, executives at Intel, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics have expressed confidence that the worst is over for the chip industry, which had been in a prolonged slump.

South Korea-based Samsung, the world’s largest memory-chip maker, on Tuesday posted a 38% year-over-year drop in net profit for the third quarter, but it said customers were getting back to normal inventory and that production cuts had eased the supply glut. The company cited growing demand related to artificial intelligence and new personal computers and smartphones incorporating more memory as reasons for optimism.

“We think that the current recovery that we’re seeing will continue next year," said Kim Jae-june, a Samsung memory-chip executive.

The emerging recovery of the semiconductor market suggests the global economy has some resilience despite challenges including inflation, the war in Ukraine and the war between Israel and Hamas. Chips are often a bellwether because they are used in many products ranging from PCs and smartphones to data centers and cars.

The prospect of a healthier industry is also reassuring to the U.S. government. Under last year’s Chips and Science Act, the U.S. is spending some $53 billion to promote semiconductor manufacturing, and U.S. allies including European nations, Japan and South Korea are backing their own chip industries with money or regulatory support. Those investments are built on the premise that semiconductors are a long-term growth industry.