Many industries have a supply and demand issues, the companies wish to supply enough supply to keep prices high and demand high, but too much supply will drive down prices. Too little demand with decrease prices, too high demand will push prices higher or there is a balancing act every quarter.
In an article by Jane Lanhee Lee, Chavi Mehta and Noel Randwich of Reuters, in the world of graphic chips the supply and demand issue has been a factor in the global supply shortages. More and more items have electronic components and every year the electronics do a little more. To do a little more, there is a high demand for graphic processing units or GPUs.
According to news site 3DCenter which tracks graphic-chip prices in Europe, the price of AMD’s Radeon RX6000 and Navidia’s GeForce RTX30 which are used in gaming fell to less than 20% of the Manufacturers Suggested Retail Price from over 80% at the start of the year.
Softening demand from PC and smartphone markets is resulting in price drops of other chips such as leading edge processors, including CPUs and some memory chips according to Summit Insights Group analyst Kinnagi Chan.
Chip makers including Intel and TSMC are planning multibillion dollar expansions.
Linking to dividend paying stocks, many products have a supply and demand curve linked to them and if there is too much supply prices fall, too much demand prices go up. It is easy to see in commodity prices, but manufacturing and retail fit it as well. For your investments try to understand what the supply and demand is.
There are more questions than answers, till the next time – to raising questions.