Samsung Electronics and SK Hynix's chip business losses totaled more than 21 trillion won

 

【Lansheng Technology News】According to Korean media reports, Samsung Electronics and SK Hynix’s chip business has a combined loss of more than 21 trillion won (US$16.1 billion), mainly due to the cyclical downturn in the semiconductor industry in 2023. Shares of Samsung Electronics, the world's No. 1 memory chip maker by third-quarter revenue, plunged 77.6% year-on-year as its chip unit, the group's cash cow, continued to be hit by a global supply glut. Samsung’s chip business suffered a cumulative operating loss of 12.7 trillion won in the first three quarters of this year.

Starting from the end of 2022, the oversupply of memory chips began to hinder the development of the global semiconductor industry, as demand for electronic devices, especially smartphones and laptops, did not rebound even after the COVID-19 due to ongoing economic uncertainty.

SK Hynix, the world's top memory chip maker, has not escaped the impact of the industry slowdown. SK Hynix's revenue in the third quarter of 2023 plummeted 17% year-on-year, with a cumulative operating loss of 8.1 trillion won in the first three quarters of this year. On the bright side, the memory chip industry is showing signs of recovery due to surge in demand for advanced memory chips, such as high-bandwidth memory chips used in artificial intelligence applications. The production reduction measures implemented in the first half of the year helped control inventories and stabilize price declines.

Financial reports show that semiconductor inventories of Samsung Electronics and SK Hynix remained high in the third quarter of this year due to shrinking demand caused by the long-term global economic downturn.

Samsung's inventory assets reached 55.2 trillion won ($42.3 billion) as of the end of September, a 5.9% increase from 52.1 trillion won at the end of 2022, Samsung said earlier in a quarterly report released by the Electronic Disclosure Committee of the Financial Supervisory Service. In particular, the tech giant's chip business inventories jumped 16.1% from 29 trillion won to 33.7 trillion won during the aforementioned period. Inventories in Samsung's semiconductor field have more than doubled from 16.4 trillion won at the end of 2021.

SK Hynix, the second-largest memory chip maker, said in its quarterly report that its inventories were worth 14.9 trillion won as of September, down 4.6% from 15.6 trillion won nine months ago. But SK Hynix's inventory has almost tripled from 5.5 trillion won at the end of 2021.

The combined inventory levels of the two chipmakers increased 8.8% over the past nine months to 48.6 trillion won.

The proportion of chip inventory in Samsung's total assets increased from 11.6% at the end of last year to 12.2% in the third quarter. But SK Hynix's market share fell to 14.6% from 15.1% in the same period.

Meanwhile, Samsung has sold about 1.3 trillion won worth of shares in Dutch chip equipment maker ASML Holdings NV to secure cash flow amid a slowdown in the chip industry, its quarterly report showed. Samsung's stake in Veldhoven-based ASML fell to 1.58 million shares, or 0.4%, at the end of September from 2.75 million shares, or 0.7%, at the end of June.

Since 2000, the South Korean tech giant has been working with ASML, one of Samsung's largest chip manufacturing partners and the sole manufacturer of extreme ultraviolet lithography systems, to improve its competitiveness in semiconductor manufacturing. In 2012, the Korean technology giant invested approximately 400 billion won in the research and development of ASML's next-generation lithography technology over the next five years. Samsung also purchased a 3% stake in ASML for about 700 billion won at the time and sold half of its shares four years later for 600 billion won.

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