China Lockdowns Impact of Chipmakers, Industrials

Industrial conglomerates GE, 3M, Texas Instruments, and SK Hynix warned that the severe restrictions from China’s COVID-19 further disrupt supply networks and hurt their income.

China’s zero-sum policy to combat the Omicron variant; brought a new lock to many cities. Forced factories to close and worsened global supply chain blocking. This hampered financial markets, which cares about hitting the world economy. Most of them have only now recovered from the fall caused by the pandemic.

And even as companies try to keep up with the rising costs of everything from starting with labor to ending with raw materials, Russia’s invasion of Ukraine and related Western sanctions have pushed up energy prices. Together, supply chain issues, the Russia-Ukraine war, and China’s impact on COVID-19 have hurt quarterly revenue; By about six percentage points.

Culp does not expect GE to repay inflation this year fully; He said the company is checking costs to assess the new reality of the business. It is also moving more decentralized to improve pricing to run its business closer to customers.

China Lockdowns and Global Crisis

3M, another U.S. giant, said Tuesday that the Chinese shutdown slowed sales in April, coupled with the Ukraine crisis. The firm, which has already struggled with chip shortages and high raw material costs, said it would continue to raise prices to offset inflation and supply chain pressures; Responds to GE that it has already raised prices and used price escalation points in its service contracts. According to the CEO of 3M, the prospect remains unclear. It isn’t easy to predict.

SK Hynix, the world’s second-largest maker of memory chips, said shutting down China was the most significant risk. This leads to weak demand for chips on mobile and personal computers; however, it should increase in the second half.

According to a Hynix officer, the growth in demand in the smartphone market will slow down, especially in China. And the supply of mobile memory chips is expected to increase at an early single-digit percentage. This is even slightly lower than expected at the beginning of the year. On Tuesday, Texas Instruments reported delays in consumer factories; Also forecasted current quarter earnings by Wall Street estimates.