As a result of the global shutdown, personal and business Internet usage is way up. SimilarWeb reported that users spent an additional 5 billion hours of screen time in March — a 13 percent leap over February — on the 100 most popular sites, including Facebook and Google. Likewise, Amazon, Netflix and YouTube are thriving. That’s led to a surge in demand for chipsets. Micron Technology chief executive Sanjay Mehrotra said his company is shifting production of its chips away from smartphones and towards data-center products.
The Wall Street Journal reports that, “prices for digital storage and memory have been holding up since the start of the pandemic,” and, according to IDC analyst Kuba Stolarski, “while the memory-chip bump may be temporary, suppliers to the cloud can expect the rising demand to last ‘at least as long as the shutdowns’.”
To accommodate rising demand, Amazon, Netflix and YouTube have all “throttled their streaming speed … [and] many data centers deliberately operate at less than peak capacity to account for surges in traffic or potential new clients who might move their business into the cloud.” By doing so, they have avoided “serious issues including sustained outages during the pandemic.”
But ITRenew chief strategy officer Andrew Perlmutter noted that, “with no signs that usage will let up, the largest cloud companies, such as Amazon Web Services and Microsoft Azure, are working to maintain that buffer … [and] besides increasing purchases, some major cloud providers are keeping older equipment longer and using software to more efficiently manage data.”
Among the providers doing well during this crisis is California-based Inphi Corporation, which makes semiconductor networking components for data center gear, and experienced strong Q1 sales “as a result of faster upgrades of equipment and demand for more bandwidth.”
Some analysts noted, however, that “the boom time for chipmakers may be brief, given the industry’s sensitivity to supply and demand.” They added that, “some cloud providers are buying up inventory now in anticipation of a second coronavirus wave, potentially denting sales later in the year.”
At SK Hynix, which makes DRAM and NAND flash memory chips, head of finance/vice president Jin-Seok Cha warned that, “if the economic downturn is prolonged, we cannot discount the possibility that even server demand could weaken.”