Samsung Memory Confident in No.1 Position... 'Super Gap' Without Production Cuts

Samsung Electronics Semiconductor Operating Profit Drops 49%
Impact of Memory-Centered Semiconductor Downturn
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Overcoming Challenges Through High-Value Demand Response and Yield Improvement

[Asia Economy Reporter Kim Pyeonghwa] Samsung Electronics will endure the semiconductor winter without production cuts or investment reductions. Despite semiconductor market sluggishness causing third-quarter semiconductor operating profit this year to nearly halve compared to the same period last year, the company aims to overcome difficulties through technological superiority and proactive investment. It will focus on responding to high value-added memory demand and improving foundry (semiconductor contract manufacturing) yield.

Samsung Electronics announced on the 27th that its semiconductor (DS) business recorded sales of 23.02 trillion KRW and operating profit of 5.12 trillion KRW in the third quarter of this year. Sales decreased by 14% compared to the same period last year, and operating profit shrank by 49.16%. Particularly, in Samsung’s core memory business, sales reached 15.23 trillion KRW, down 27% from the previous year, reflecting the downturn centered on the highly cyclical memory market.

Previously, the semiconductor industry was watching closely whether Samsung Electronics would reveal plans for production adjustments or investment cuts in this earnings announcement. As the memory market downturn intensified, U.S. and Japanese memory companies Micron and Kioxia, as well as SK Hynix the day before, officially announced production cut plans to balance supply and demand. Both Micron and SK Hynix recorded negative growth in their third-quarter results.

Despite the market downturn, Samsung Electronics maintained its existing plans and expressed its intention to expand market scope. Although the market conditions are difficult, the company plans to respond to gradually increasing demand through proactive technology and investment expansion. Earlier, Samsung announced it would be the world’s first to mass-produce 5th generation 10-nanometer-class DRAM next year and detailed plans to expand foundry capacity and mass-produce 1.4-nanometer chips by 2027. Securities analysts attribute Samsung’s ability to pursue this strategy to its superior NAND cost competitiveness compared to competitors and cash assets worth approximately 110 trillion KRW.

In the fourth quarter, Samsung plans to continue the impact of customer inventory adjustments in memory but will focus on high-capacity product demand and operate a profitability-centered DRAM business through product mix management considering cost competitiveness. In the system (non-memory) semiconductor business, it plans to expand sales of 200-megapixel image sensors, and in foundry, it aims to continue improving performance through yield enhancement.

The memory market is expected to grow at a low single-digit rate next year, indicating a challenging environment. Samsung Electronics believes some demand can recover despite macroeconomic uncertainties. Given anticipated production constraints across the industry, the company plans to focus on supply management linked to its mid-term plans. In memory, it will maintain market leadership by responding to high value-added demand such as Double Data Rate (DDR)5 and LPDDR5X. In the growing foundry sector, Samsung intends to strengthen advanced process leadership and expand new orders in fields like high-performance computing (HPC) to broaden its market presence.

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