Semiconductor Demand Also 'Shaken' by Consumption Slowdown...Concerns Over Samsung and SK Hynix Contraction

Growing Global Inflation and Economic Uncertainty Concerns
Semiconductors Also Hit by Weak Mobile and PC Demand

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] Semiconductor demand is wavering as consumer electronics such as smartphones and PCs experience slowed consumption due to global inflation and economic uncertainty.

According to the semiconductor industry on the 15th, recent market research firm TrendForce forecasted that DRAM and NAND prices in the third quarter will fall by 3-8% and 0-5%, respectively, compared to the previous quarter. This falls short of market expectations, with the main reason cited as rising inventory levels among customers who purchase semiconductors to manufacture IT devices, amid weak mobile and PC demand.

Similar forecasts are emerging domestically as well.

Choi Do-yeon, a researcher at Shinhan Financial Investment, stated, "Due to prolonged macroeconomic uncertainty, smartphone and PC shipments have fallen below expectations, partially confirming a slowdown in semiconductor orders," adding, "Set manufacturers' inventories are increasing, so DRAM and NAND demand bit growth (bit shipment growth rate) for the second and third quarters is expected to fall short of expectations." Nam Dae-jong, a researcher at Ebest Investment & Securities, also expressed concern, saying, "We estimate that DRAM and NAND demand in the third quarter will be weaker than expected," and "The impact of weak mobile and PC demand appears to be spreading to server demand."

As a memory semiconductor powerhouse with a high global market share, South Korea is inevitably taking a direct hit from the decline in DRAM and NAND prices. In fact, NAND sales, where Samsung and SK hold over 50% of the global market share, stood at $17.92 billion in the first quarter of this year, down 3% from the previous quarter. In particular, as China's smartphone demand worsened, SK Hynix, which focuses on mobile products, saw its shipment performance decline by more than 10% compared to the previous quarter, showing sluggishness.

Concerns are growing that the high inflation, high exchange rates, high interest rates, and low-growth economic environment, which worsen consumer sentiment, will accelerate the slowdown in demand for semiconductors and electronic products for the time being.

Market research firm IDC projected that global smartphone shipments this year will reach 1.31 billion units, down 3.5% from last year. PC and tablet shipments are also expected to decline by 8.2% and 6.2%, respectively. Regarding this situation, David Zinsner, CFO of Intel, recently remarked at an investment bank-hosted conference, "Economic weakness could also impact the semiconductor market," heightening concerns.

However, the fact that a solid demand base such as data center servers still exists in the memory market is expected to serve as a breakthrough for the Korean semiconductor industry. Prices for enterprise SSDs, a key component of data center servers, rose 5-10% in the second quarter and are expected to maintain previous levels in the third quarter despite the overall downward trend in NAND prices.

This content was produced with the assistance of AI translation services.