Taiwan Chip Maker United Microelectronics Blames Revenue Loss on Crypto Bear Run
United Microelectronics, the Taiwan-based chipmaker saw a revenue decline of about 10% in the Q4 2018. Just like TSMC that provide Bitmain with its chips, they claim that some of their revenue loss was due to the crypto bear run.
Lower prices mean that there is less demand for mining; thus, there is less need for mining hardware.
What the Leadership Had to Say
The co-president of the company said that they expected that Q1 2019 would be more of the same. This was partly due to the lower than expected demand for mid-level and entry-level smartphones and the crypto winter.
He mentioned that the company would need time to transform to reach its full potential. The co-president added that ongoing efforts at transformation were what had helped the company endure the headwinds.
Mining is Not Everything
In 2017, the demand for mining was quite heavy. However, chipmakers have been supplying chips to Bitmain long before crypto mining kicked in. Thus, the continual mention of the crypto bear run seems to be a cop-out by chipmakers. The bear run has had a bigger impact on retail investors and traders than on miners.
After all, miners determine daily prices. It is their willingness to accept a given price for new coins, which plays a role in the bear market. When markets take off far above the mining cost, the miners benefit. When prices drop, they can tweak their operations to remain profitable. What is certain is that mining difficulty for BTC rose in 2018, meaning that more miners were joining.
It is not known whether United Microelectronics has any relation with Bitmain. It is likely they provide their chips to other companies. Demand from mining rigs makers can be high when mining demand is high. However, most of the chips are supplied to other sectors such as computers and phones.
One thing not being recognized is stagnating cellphone demand. In 2017, while mining demand drove profits for chipmakers, cellphone demand grew less than 2%. There are more phones than any other electronic device in the world. Falling demand will have a major impact on chipmakers than a fall in crypto mining.
Why Phones Not Being Blamed?
It is up to phone makers rather than crypto miners to grow demand for chips. They need to explore markets in developing nations that were previously under-connected. Developing nations usually have a high demand for cheap tech. If the current markets are saturated, it might be time for Apple and Samsung to start creating $100 phones instead of trying to create the next $1000 phone.
In any case, it is becoming tiresome to hear how the crypto bear run has caused chip demand to plummet. Computer chips are in all devices today. Even without crypto mining, $35 billion in a quarter is not bad. Demand for crypto will manifest once token projects begin to gain mass adoption; speculative bubbles will always come and go in the crypto world.