Home » I can’t buy even if I offer a great discount… Samsung Hynix Super Emergency

I can’t buy even if I offer a great discount… Samsung Hynix Super Emergency

by archyde
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It has been confirmed that Samsung Electronics, the world’s No. 1 memory semiconductor company, has lowered its semiconductor sales forecast for the second half of the year by more than 30%. This is because the demand for semiconductors has sharply contracted as the economy froze due to central bank rate hikes caused by global inflation. As the semiconductor industry has entered a full-fledged ice age, there are many forecasts in the industry that the recession will continue until the first half of next year when semiconductor inventories are eliminated.

According to the semiconductor industry on the 30th, a senior official at Samsung Electronics’ DS division said, “We have lowered our sales guidance for the second half of this year (the company’s internal forecast) by 32% from our April forecast,” at a staff meeting held on the 28th. In April, Samsung Electronics’ semiconductor sales market consensus for the second half of the year (average estimates by securities companies) was 67,294 billion won. If the 32% decline mentioned by this official is applied to the market consensus, the semiconductor sales forecast for the second half of the year will be reduced to around 45 trillion won.

It is analyzed that Samsung Electronics’ conservative outlook is largely affected by the recent decline in memory semiconductor prices. According to DRAMeXchange, a market research company, the fixed transaction price for general-purpose DRAM products for PCs (the price during mass transaction between companies) plummeted 30.5% from $4.10 in July last year to $2.85 in September this year. The NAND flash price also fell 10.6% from $4.81 to $4.30 during the same period. This is because orders for memory semiconductors are decreasing as PC demand decreases due to the COVID-19 pandemic and smartphone sales in China plunged due to the lockdown in Shanghai, China. An official from the semiconductor industry said, “Both DRAM and NAND flash suppliers and customers are holding too many semiconductor inventories.

Semiconductor companies are responding to the memory semiconductor decline cycle by reducing investment. On this day, Sanjay Merotra, CEO of Micron, the world’s third largest DRAM producer, said, “We will reduce the amount of semiconductor wafer investment in fiscal 2023 (September 2022 to August 2023) by 50% compared to the previous year.” said. Even if it is not until production cuts, it means that it will prepare for a situation of ‘oversupply’ by reducing the increase in semiconductor production.

Professor Hwang Cheol-seong of Seoul National University’s Department of Materials Science and Engineering said, “It is inevitable for domestic semiconductor companies to adjust their supply for a certain period of time. .

Severe winter in the semiconductor market
Samsung and Hynix, 33 trillion won in inventory alone… It doesn’t sell even at ’20-30% discount on DRAM’

“I won’t buy it even if I offer an extraordinary discount.”

Recently, the Chinese sales teams of Samsung Electronics and SK Hynix have taken an emergency. This is because of the head office’s special mission to eliminate the memory semiconductor inventory accumulated in the warehouse as soon as possible. Industry insiders say that even presenting a ‘20% discount on mobile DRAM’ to Chinese smartphone customers and a ‘30% discount on PC DRAM’ card to laptop makers is frustrating. An official of a semiconductor conglomerate said, “Due to the impact of the COVID-19 pandemic and the US-China conflict, customers are also securing sufficient inventory.

Semiconductor inventories surge 30% in half a year

According to the semiconductor industry on the 30th, the biggest concern of memory semiconductor companies is ‘inventory’. During a boom period when products are selling well, it is not a big deal if inventory accumulates. However, if inventory increases during a recession, a company’s cash flow may deteriorate and new investment may shrink. When a boom cycle begins, it becomes difficult to respond quickly.

Memory semiconductor companies’ inventory is at a ‘history’ level. As of the end of June, the inventory of Samsung Electronics’ DS division, which is in charge of the semiconductor business, stood at 21,507.9 billion won, up 5.52.8 trillion won (30.7%) from the end of last year (16,455.1 billion won). SK Hynix’s situation is similar. The company’s inventory assets surged 33.2% (2.96 trillion won) from 8,916.6 billion won to 11.87 trillion won during the same period.

An official from the semiconductor industry said, “It is impossible to keep stockpiling while waiting for a boom that will never come.

‘Unprecedented’ oversupply

The root cause of inventory increase is ‘semiconductor oversupply’. In the first quarter alone, semiconductor companies such as Samsung Electronics and SK Hynix were confident that “even if demand for PC semiconductors decreases due to the pandemic, the market for smartphones and servers will continue to grow.”

However, as unpredictable risk factors (risks) such as the Russian-Ukraine war and the Chinese government’s blockade of Shanghai prolonged, the economy between China and the European Union (EU) worsened. Consumption also contracted globally due to inflation and steep interest rate hikes. According to market research firm IDC, global smartphone sales this year are expected to decrease by 6.5% compared to last year. Apple has also reportedly abandoned its plans to produce the new iPhone 14. PC sales are expected to plummet by more than 10%.

As semiconductor demand plummeted, companies suggested ‘supply control’ in the third quarter, but some say it was “already too late”. On the same day, Micron CEO Sanjay Merotra evaluated the semiconductor market situation as “an unprecedented (unprecedented) oversupply market”. Micron has decided to reduce wafer investment by 50% and total capital expenditure (CAPEX) by 30% for fiscal year 2023 (September 2022 to August 2023) compared to fiscal year 2022. “We will cut supply more than demand,” Merotra said.

“The second half of this year will be difficult due to reduced demand.”

The question is how long the semiconductor ice age will last. The outlook for this year is that the industry will continue to slump. TrendForce, a Taiwanese semiconductor research firm, predicted that DRAM and NAND prices would fall by up to 18% in the third quarter compared to the previous quarter and by 20% in the fourth quarter. Samsung Electronics cut its sales forecast for the second half of this year by 32% from the previous one based on this market forecast. Micron also presented a sales guidance (company forecast) for September-November of $4.25 billion, which is far below the consensus (average estimate of securities companies) of $5.6 billion.

Opinions are divided as to whether the recovery will be next year. Micron made a rosy outlook on the same day, saying, “In the second half of next year, as DRAM prices show a recovery trend, sales will increase.” The reason was cited as the reason that semiconductor companies began to regulate supply.

Domestic companies such as SK Hynix are making a more cautious outlook. A semiconductor company official said, “The down cycle will continue until next year. In the industry, the prevailing view is that the recovery rate of the NAND flash industry will be slower than that of DRAM, with more inventory accumulating and fierce competition among companies.

Park Jae-geun, a professor of convergence electronics engineering at Hanyang University, said, “The timing of Intel’s release of new server central processing units (CPUs) and the activation of DDR5 distribution will determine the timing of the recovery of the memory semiconductor industry. .

Reporter Hwang Jung-soo [email protected]

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