Korean Semiconductor Industry Faces 'Boritgogae' Challenges at Both Year-End and New Year Start

Record Cold Snap in Semiconductors Leads to Downgraded Earnings Outlook
Samsung Electronics and SK Hynix Also Lower 1Q Forecast for Next Year

Supply Adjustment in Memory Industry Seen as Positive Factor
"Earnings Improvement Expected in Second Half of Next Year"

[Asia Economy Reporter Kim Pyeonghwa] Samsung Electronics and SK Hynix, the two leading domestic semiconductor companies, are experiencing an unprecedented semiconductor downturn, leading to a downward trend in performance forecasts through the New Year. With a deterioration in fourth-quarter results expected this year, the earnings outlook for the first quarter of next year is also being gradually revised downward.

According to financial information firm FnGuide on the 15th, Samsung Electronics' consensus estimates (average of securities firms' forecasts) for fourth-quarter sales and operating profit this year are 76.713 trillion KRW and 8.2264 trillion KRW, respectively. Compared to the same period last year, sales are similar, but operating profit has shrunk by 40.68%. SK Hynix is also expected to turn to a loss with sales of 8.9167 trillion KRW and an operating loss of 419.2 billion KRW.

This year, signs of sluggishness in the memory semiconductor market began to appear, and from the third quarter, the deterioration in related companies' performance started to surface. As the fourth quarter began, the number of more negative market outlooks increased significantly.

In fact, market research firm TrendForce forecasted that the average selling price (ASP) of DRAM in the fourth quarter of this year would drop by 18-23% compared to the previous quarter. This followed a pessimistic forecast in September predicting a 13-18% decline, with the estimate lowered further last month. The NAND market is also expected to see a 20% decrease in global sales in the fourth quarter compared to the previous quarter ($13.71 billion) due to increased inventory and price pressure.

Given this situation, the outlook for the first quarter of next year and earnings forecasts are clearly trending downward. Samsung Electronics' consensus estimates for first-quarter sales and operating profit next year are 74.035 trillion KRW and 6.9704 trillion KRW, respectively. These figures are averages of forecasts made over the past three months. Looking only at the average of forecasts from the past month, sales are 72.5399 trillion KRW and operating profit is 6.5786 trillion KRW. This indicates that more experts are becoming pessimistic about the future over time.

SK Hynix's three-month forecast for first-quarter sales next year is 8.9167 trillion KRW with an operating loss of 419.2 billion KRW, but narrowing to the one-month average, sales drop to 7.3791 trillion KRW and operating loss widens to 1.3639 trillion KRW. As negative views on market conditions increase, the operating loss forecast has risen by 944.7 billion KRW in a short period.

There are forecasts that the situation will improve in the second half of next year as semiconductor companies reduce supply. Major memory industry players, including SK Hynix, U.S.-based Micron, and Japan's Kioxia, have announced production cut plans. Some experts also foresee the possibility of further adjustments.

Do Hyunwoo, a researcher at NH Investment & Securities, said in a report on SK Hynix, "The reduced (memory) supply is expected to coincide with the recovery of smartphone and hyperscaler data center investments anticipated in the second half of next year, leading to improved earnings in the latter half of next year."

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