Samsung Electronics Posts Significant Deficit in Semiconductor Sector Amid Global Memory Market Downturn

Samsung Electronics suffered a deficit of 4.6 trillion won in the semiconductor sector alone due to deteriorating global memory market conditions.

It is the first time in 14 years that Samsung Electronics recorded a quarterly loss in the semiconductor sector after consecutive losses in the fourth quarter of 2008 and the first quarter of 2009 during the financial crisis.

Samsung Electronics announced that its operating profit for the first quarter of this year on a consolidated basis was 640.2 billion won, a 95.5% decrease from the same period last year.

Sales were KRW 63.7454 trillion, down 18.1% from the same period last year, and net profit was KRW 1.5746 trillion, down 86.1%.

In particular, it was confirmed that the device solution and DS divisions, which are in charge of semiconductors, recorded an operating loss of 4.58 trillion won.

DS division sales were only 13.73 trillion won, but compared to the same period last year, it was halved.

As for memory semiconductors, prices fell sharply as customers continued to adjust their inventories, resulting in lower performance. Demand for DRAM was also sluggish due to high inventories at customers such as servers.

However, it appears that the mobile experience in charge of smartphones, the Galaxy S23 sales effect in the MX business has made up for the deficit in the semiconductor sector.

Even in difficult circumstances, investment has increased significantly.

Samsung Electronics announced that its facility investment in the first quarter of this year was KRW 10.7 trillion, up 36% from the same period last year, of which KRW 9.8 trillion, or 82%, was invested in the semiconductor sector.

In the market, as Samsung Electronics joined the memory industry’s production cuts, it is expected that the effect of production cuts will begin in earnest from the second half of the year, and that the decline in memory prices will enter a real phase.

However, there is an opinion that the exit from the semiconductor recession tunnel is hard to see, and external variables such as the US-China conflict and the Ukraine war are uncertain, so there is an opinion that there will be limits to improving the industry only by reducing supply.