How the world went from a semiconductor shortage to a major glut
Wong Yu Liang | Moment | Getty Images
The semiconductor shortage that affected everything from cars to games consoles during the height of the Covid-19 pandemic has turned into a chip glut — and some of the world’s biggest chipmakers are taking a hit.
Semiconductors are tiny components that are integral to a slew of products including refrigerators, cars, smartphones and LED bulbs.
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The Covid-19 pandemic caused huge disruption in the supply chains and production of chips, as consumers stuck at home went mad for products like PCs and smartphones.
This boosted demand for semiconductors such as the memory chips made by South Korean firms Samsung, SK Hynix and Micron.
There was also increased demand for less-advanced chips required for processes like power management in devices.
It led to a widespread shortage of products such as games consoles and even components for washing machines, which continued through the first half of 2022. There was also a lack of semiconductors that go into cars, leading to a drop in the production of vehicles from major automakers.
While the supply and demand dynamics for some chips have since become more balanced, in other areas, the chip shortage has turned into a glut.
Memory chip oversupply
Two types of chips are in oversupply right now: NAND and DRAM memory. These go into devices like laptops and also servers in data centers.
The glut came after companies began to stockpile chips amid the shortage to build up inventories.
But then the economy slowed down.
Demand for products like smartphones and laptops has dropped off in a big way — particularly as many people bought them during the pandemic.
“So, the makers of these end products stopped ordering chips and instead focused on selling through the inventory they already had,” Peter Hanbury, partner in the telecoms, media and technology practice at Bain & Company, told CNBC.
“This led to a strong ‘bullwhip’ effect for the semiconductor markers further back in the supply chain where sky high demand during the chip shortage suddenly dried up as end markets stopped ordering chips and instead focused on selling through the inventory they already had.”
Not all types of semiconductors are in oversupply, however, with demand for chips from the auto sector remaining strong.
Hanbury said that some chips made for specific purposes are not easy to exchange for other semiconductors, and so “their lead times and prices are improving but remain quite high.”
From profit boost to income plunge
The pandemic-induced shortage of semiconductors helped boost chip makers’ profits as prices jumped. This included Samsung, the world’s largest memory chip manufacturer.
This year, however, Samsung and its rivals SK Hynix and Micron, have had a tough time.
Samsung on Thursday said operating profit for the second quarter plunged 95% year-on-year. Meanwhile, SK Hynix swung to a loss in the second quarter versus a profit in the same period last year.
Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, said last week that net income for the second quarter fell 23.3% from a year ago. It was its first quarterly profit decline in 4 years.
Looking ahead, the PC market appears weak, which is likely to impact Samsung, SK Hynix and Micron.
For TSMC, the global smartphone market — a major revenue driver — is also under pressure.
“The smartphone market is still the biggest part of TSMC’s revenue. That part is still not seeing any meaningful pick up,” Sze Ho Ng, an analyst at China Renaissance Securities, told CNBC via phone.
Chip balance soon?
In an effort to boost the price of chips and reduce supply in the market, the major memory chip firms have announced production cuts.
Samsung said it expects global demand to recover in the second half of the year, and others have echoed a similar sentiment.
TSMC, however, said last week that it expects “continued inventory adjustment” from customers.
“After this year’s correction, I think there will be a second-half growth scenario for TSCM, but how strong that will be will be dependent on the macro environment,” Ng said.
Ultimately, recovery for these firms will depend on whether demand picks up for end products like consumer electronics, but that’s related to a macroeconomic recovery which looks far from certain.
Chief executive officer of Google Sundar Pichai.
Marek Antoni Iwanczuk | Sopa Images | Lightrocket | Getty Images
Google on Friday made the latest a splash in the AI talent wars, announcing an agreement to bring in Varun Mohan, co-founder and CEO of artificial intelligence coding startup Windsurf.
As part of the deal, Google will also hire other senior Windsurf research and development employees. Google is not investing in Windsurf, but the search giant will take a nonexclusive license to certain Windsurf technology, according to a person familiar with the matter. Windsurf remains free to license its technology to others.
“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” a Google spokesperson wrote in an email. “We’re excited to continue bringing the benefits of Gemini to software developers everywhere.”
The deal between Google and Windsurf comes after the AI coding startup had been in talks with OpenAI for a $3 billion acquisition deal, CNBC reported in April. OpenAI did not immediately respond to a request for comment.
The move ratchets up the talent war in AI particularly among prominent companies. Meta has made lucrative job offers to several employees at OpenAI in recent weeks. Most notably, the Facebook parent added Scale AI founder Alexandr Wang to lead its AI strategy as part of a $14.3 billion investment into his startup.
Douglas Chen, another Windsurf co-founder, will be among those joining Google in the deal, Jeff Wang, the startup’s new interim CEO and its head of business for the past two years, wrote in a post on X.
“Most of Windsurf’s world-class team will continue to build the Windsurf product with the goal of maximizing its impact in the enterprise,” Wang wrote.
Windsurf has become more popular this year as an option for so-called vibe coding, which is the process of using new age AI tools to write code. Developers and non-developers have embraced the concept, leading to more revenue for Windsurf and competitors, such as Cursor, which OpenAI also looked at buying. All the interest has led investors to assign higher valuations to the startups.
This isn’t the first time Google has hired select people out of a startup. It did the same with Character.AI last summer. Amazon and Microsoft have also absorbed AI talent in this fashion, with the Adept and Inflection deals, respectively.
Microsoft is pushing an agent mode in its Visual Studio Code editor for vibe coding. In April, Microsoft CEO Satya Nadella said AI is composing as much of 30% of his company’s code.
The Verge reported the Google-Windsurf deal earlier on Friday.
Technology
Nvidia’s Jensen Huang sells more than $36 million in stock, catches Warren Buffett in net worth
Jensen Huang, CEO of Nvidia, holds a motherboard as he speaks during the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, on June 11, 2025.
Gonzalo Fuentes | Reuters
Nvidia CEO Jensen Huang unloaded roughly $36.4 million worth of stock in the leading artificial intelligence chipmaker, according to a U.S. Securities and Exchange Commission filing.
The sale, which totals 225,000 shares, comes as part of Huang’s previously adopted plan in March to unload up to 6 million shares of Nvidia through the end of the year. He sold his first batch of stock from the agreement in June, equaling about $15 million.
Last year, the tech executive sold about $700 million worth of shares as part of a prearranged plan. Nvidia stock climbed about 1% Friday.
Huang’s net worth has skyrocketed as investors bet on Nvidia’s AI dominance and graphics processing units powering large language models.
The 62-year-old’s wealth has grown by more than a quarter, or about $29 billion, since the start of 2025 alone, based on Bloomberg’s Billionaires Index. His net worth last stood at $143 billion in the index, putting him neck-and-neck with Berkshire Hathaway‘s Warren Buffett at $144 billion.
Shortly after the market opened Friday, Fortune‘s analysis of net worth had Huang ahead of Buffett, with the Nvidia CEO at $143.7 billion and the Oracle of Omaha at $142.1 billion.
The company has also achieved its own notable milestones this year, as it prospers off the AI boom.
On Wednesday, the Santa Clara, California-based chipmaker became the first company to top a $4 trillion market capitalization, beating out both Microsoft and Apple. The chipmaker closed above that milestone Thursday as CNBC reported that the technology titan met with President Donald Trump.
Brooke Seawell, venture partner at New Enterprise Associates, sold about $24 million worth of Nvidia shares, according to an SEC filing. Seawell has been on the company’s board since 1997, according to the company.
Huang still holds more than 858 million shares of Nvidia, both directly and indirectly, in different partnerships and trusts.
WATCH: Nvidia hits $4 trillion in market cap milestone despite curbs on chip exports
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