Samsung and SK Semiconductor 2Q Market Share at 19.6%... Choosing 'Investment' Strategy During Recession

Samsung Electronics Leads 2Q Market Share at 12.8%... Server and System Semiconductors Drive Growth
SK Hynix Rises to 3rd with 6.8% Market Share Increase
Semiconductor Market Faces 'Winter' in Second Half... Memory Prices Expected to Fall
"Investment Is the Answer Especially in Harsh Times"

Samsung Electronics Pyeongtaek Campus view / Source=Samsung Electronics

[Asia Economy Reporter Kim Pyeonghwa] Samsung Electronics and SK Hynix increased their market shares by ranking first and third respectively in the global semiconductor market in the second quarter. While the second-ranked U.S. company Intel recorded negative growth, the combined market share of the two companies rose to 19.6%. Although concerns are emerging as the market is expected to freeze in the second half of the year, especially centered on memory semiconductors, both companies intend to overcome the crisis through strategic investments.

Samsung Electronics and SK Hynix Increase 2Q Market Shares... Combined Share Reaches 19.6%

According to market research firm Omdia on the 19th, Samsung Electronics recorded sales of $14.5 billion in the second quarter, marking a 0.3% increase from the previous quarter to 12.8%. Samsung Electronics has maintained the top position for four consecutive quarters up to this second quarter. In contrast, Intel, which competed with Samsung Electronics for first place, dropped 1.7 percentage points from 11.1% in the previous quarter to 9.4%, remaining in second place.

Steady demand for server semiconductors and strong performance in system semiconductors drove Samsung Electronics' sales. In the system semiconductor market, specifically mobile application processors (AP), Samsung Electronics' shipments in the second quarter increased by 53.0% compared to the previous quarter, achieving a 7.8% market share. Unlike major players such as MediaTek, Qualcomm, and Apple, which all recorded shipment declines, Samsung showed growth alone. The strategy of expanding the share of mid- to low-end smartphones proved effective.

SK Hynix also rose to third place with a 6.8% market share in the second quarter, up 0.6% from the previous quarter. SK Hynix had recorded a 3.2% negative growth in the first quarter compared to the previous quarter but has returned to a recovery trend. SK Hynix posted sales of 13.811 trillion KRW in the second quarter, up 34% year-on-year and 15% quarter-on-quarter. The rise in NAND flash prices and yield improvements contributed to the performance.

The combined market share of the domestic semiconductor industry, including Samsung Electronics and SK Hynix, reached 19.6% in the second quarter, up 0.9% from 18.7% in the previous quarter. From fourth place onwards, U.S. companies such as Qualcomm (5.9%), Micron (5.2%), and Broadcom (4.2%) consecutively occupied the rankings, while the top spot was maintained.

SK Hynix M15 Campus in Cheongju, Chungbuk / Source=SK Hynix

Memory-Centered Market Outlook for the Second Half: 'Concerns'

Although Samsung Electronics and SK Hynix achieved results in the second quarter, they face several challenges in the second half of the year. This is because a deterioration in the semiconductor market centered on memory, where domestic companies hold a majority share, is anticipated.

The World Semiconductor Trade Statistics (WSTS) recently revised down the growth rate of the memory market this year from 18.7% to 8.2%. According to market research firm IC Insights, the system semiconductor market for image sensors (CIS) used in smartphone camera modules is also expected to shrink by 7% year-on-year to $18.6 billion this year. Although CIS is not a core product for either company, it is a category in which both are engaged.

In particular, a simultaneous decline in prices of DRAM and NAND flash, which could affect sales, is forecasted. Market research firm TrendForce predicts that DRAM and NAND flash prices could drop by up to 18% in the third quarter. According to the Ministry of Trade, Industry and Energy, the fixed transaction price of DRAM is expected to decrease through the third quarter ($2.88) and fourth quarter ($2.50).

There is also a prediction that the global semiconductor market share could change in the third quarter. IC Insights forecasts Taiwan's TSMC's third-quarter sales to increase by 11% from the previous quarter to $20.2 billion, potentially surpassing Samsung Electronics ($18.29 billion). TSMC, which only conducts foundry (semiconductor contract manufacturing), is expected to rank first due to demand from major clients like Apple and the effect of a strong U.S. dollar, according to IC Insights.

Samsung Electronics 8GB LPDDR5 DRAM package / Source=Samsung Electronics

Samsung Electronics and SK Hynix Choose 'Investment' Strategy to Endure Recession

Samsung Electronics and SK Hynix intend to overcome the current market situation through proactive investments. Rather than shrinking due to the immediate market conditions, they choose a direct approach to prepare timely for potential future demand increases.

Samsung Electronics is investing $17 billion in Taylor, Texas, to actively establish a new foundry plant. Domestically, it plans to expand a total of three lines, including the addition of Line 4 at its largest semiconductor complex, the Pyeongtaek campus, scheduled for next year. Following the reinstatement of Vice Chairman Lee Jae-yong last month, there is also speculation that Samsung Electronics might pursue mergers and acquisitions (M&A) of semiconductor companies such as the UK-based ARM and the Netherlands-based NXP to strengthen its semiconductor competitiveness.

On the 7th, Kyung Kye-hyun, President of Samsung Electronics' Device Solutions Division, told reporters at the Pyeongtaek campus, "If investments are reduced during a recession, it leads to poor results during a boom. Rather than relying on market ups and downs, consistent investment is the right approach."

SK Hynix announced plans to invest 15 trillion KRW by 2025 to build a new semiconductor plant, M15X, in Cheongju, Chungbuk. In the U.S., it plans to invest $15 billion to establish an advanced packaging manufacturing facility and invest in semiconductor-related research and development (R&D). The SK Group has announced investments totaling 48.7 trillion KRW through its group companies in the semiconductor and materials sectors by next year. R&D investments in these fields are scheduled to reach 22.1 trillion KRW over the next five years.

SK Hynix Vice Chairman Park Jung-ho said, "Looking back over the past 10 years, SK Hynix was able to grow into a global company thanks to bold investments that anticipated the future even amid crises. Now, we must prepare for the next 10 years, and the groundbreaking of M15X will be the first step in securing a foundation for future growth."

Both companies also foresee strengthening high value-added products. In DRAM, they anticipate expanding market demand centered on the latest generation, Double Data Rate (DDR) 5. As global companies such as Intel and AMD equip next-generation server CPUs with DDR5, the share of DDR5 in the overall DRAM market is expected to increase from 3% in the third quarter of this year to 22% by the fourth quarter of next year. SK Hynix has announced plans to expand 1a nanometer processes and increase production of 16 and 24 gigabit (Gb) DDR5 products.

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