Gaming Industry is Still Suffering from the Semiconductor Crisis

The gaming industry is forecasted to grow in the next 5 years, but the process has risks. Demand decreases due to the recession prospects, and geopolitical tensions in the chip crisis may affect growth.

FREMONT, CA: The consultancy firm Bain predicted that by 2027, worldwide game revenues might increase by more than 50 per cent. The video game industry is transformed by three major trends: improved technology, worlds inspired by the metaverse, and new business structures.

Younger players between the ages of 13 and 17 are heavily involved in the gaming industry and spend roughly 40 per cent more time playing video games than on social media, music, or television. The next age group, those between the ages of 18 and 34, spends about ten hours each week on social media, although video games and music are just behind them. However, the current economic crisis is impacting the sector, and the better technology trend requires better computer chips.

Bain claims that despite signs of relief, the semiconductor bottleneck won't be resolved overnight. Others, including servers, PCs, and gaming consoles, might not get any relief until 2024 or later, while some industries, like automotive, industrial, mobile and tablet devices, and even consumer electronics, are starting to witness some relief this year.

Certain dangers could have an impact on how long the chip problem lasts. As interest rates rise and inflation rises, there is a slowdown in demand that appears to be coming about. Supply chains for semiconductors are at risk from geopolitical tensions, especially those involving Taiwan. According to rumours, the industry titan Taiwan Semiconductor Manufacturing Company (TSM) is considering expanding to Japan. Additionally, the United States' recent actions to limit technology transfers to China are beginning to impact chip makers.

One of the hazards stems from chip manufacturing, which depends on equipment usage for extreme ultraviolet lithography (EUV). The machines are produced by ASML, a firm with limited capacity situated in the Netherlands. At 150 million each, the current generation of EUV machines is the size of a bus. A machine has two kilometres of wiring and 100,000 pieces. The components must be transported using 20 trucks, three cargo planes, and 40 freight containers. Only a small number of businesses can afford the equipment, and the majority of them go to the world's top three manufacturers of cutting-edge chips: Intel (INTC: NASDAQ), Samsung, and Taiwan's TSMC (2330: TPE), the top foundry in the world. But chip evolution would not be conceivable without these devices.

ASML Holdings (ASML: AMS) announced third-quarter results that were better than expected, with revenue of Euro 5.8B (+10.2 per cent Y/Y), above expectations by Euro 410M, and a gross margin of 51.8 per cent. The corporation predicted sales for the fourth quarter were between Euro 6.1 billion and Euro 6.6 billion, up from Euro 4.98 billion in the same period last year. A 49 per cent gross margin is anticipated.

While the sector fears lower demand and is behaving in line with general market sentiment concerned about the rise in interest rates, the positive results of ASML drove the price of the share up by 6.27 per cent and lifted some of the other semiconductor companies higher. Qualcomm (QCOM: NASDAQ) increased by roughly 1.5 per cent, NASDAQ lost 0.85 per cent, and Intel and Nvidia (NVDA: NASDAQ) were among the stocks that gained less than one per cent.

Investments from Romanians are drawn to the technology sector. The most recent eToro Retail Investor Beat poll found that nearly 69 per cent of investors own tech stocks, and 71 per cent plan to do so in the next three months.