Expected Impact of Samsung Electronics Semiconductor Production Cut in Q3

Samsung Electronics Reduces Semiconductor Losses in Q2
Memory Industry Production Cuts Expected to Intensify in Q3
"DS Division Pinpoint Personnel Changes Anticipated to Enhance Competitiveness"

Samsung Electronics is expected to see the effects of memory semiconductor production cuts in the third quarter, following a reduction in losses in the semiconductor division in the second quarter. Predictions indicate a smaller decline in memory prices, and with Samsung Electronics set to ramp up mass production of high-value memory products such as HBM3 (4th generation HBM), expectations for improved performance are high.

On the 7th, Samsung Electronics announced its preliminary consolidated results for the second quarter. Revenue was 60 trillion won, down 22.28% from the same period last year. Operating profit was 600 billion won, a 95.74% decrease compared to the same period last year, but exceeded the market estimate of 281.8 billion won.

The reason Samsung Electronics' second-quarter performance, which was expected to be in the red, held up well is attributed to the semiconductor (DS) division reducing its losses. The semiconductor industry believes that Samsung Electronics recorded an operating loss of around 3 to 4 trillion won in the DS division in the second quarter by reducing memory losses compared to the previous quarter. In the first quarter, it recorded an operating loss of 4.85 trillion won.

Entering the second quarter, the decline in memory prices slowed, and Samsung Electronics increased shipments of high-value products such as High Bandwidth Memory (HBM) and Double Data Rate (DDR)5 DRAM. There is growing weight to the possibility that Samsung Electronics' second-quarter DRAM bit growth (shipment increase rate converted to bit units) rose by about 20% compared to the first quarter.

From the second half of the year, the effects of production cuts in the memory industry are expected to take full effect, positively impacting performance. Earlier, Samsung Electronics officially announced production cuts in early April, following SK Hynix and US-based Micron. Since Samsung Electronics, the number one company in the memory industry, also joined the production cuts, memory semiconductor inventory is expected to decrease from the third quarter, and the price decline could significantly slow. Donghee Han, a researcher at SK Securities, said, "Samsung Electronics' inventory asset valuation losses could rapidly shrink."

The industry has already predicted a smaller decline in memory prices. Market research firm TrendForce recently released a report stating that the average selling prices (ASP) of DRAM and NAND flash in the third quarter will fall by only up to 5% and 8%, respectively, compared to the second quarter. This is a significant reduction from the initial forecast, which expected prices to drop by 18% and 15% in the second quarter, respectively.

Samsung Electronics' plan to ramp up mass production of high-value memory products such as HBM3 (4th generation HBM) in the second half of the year could also contribute positively to its performance. Recently, Kyung Kyehyun, President of Samsung Electronics' DS Division, said, "HBM3 has received excellent evaluations from customers," and added, "HBM3 and HBM3P will contribute to the DS division's profit growth next year." HBM3P is the 5th generation product that Samsung Electronics plans to launch within this year.

Samsung Electronics' recent non-regular personnel reshuffle and organizational restructuring in the DS division at the beginning of this month, demonstrating its commitment to securing a technological lead, is also viewed positively. Samsung Electronics newly appointed Vice President Hwang Sang-jun, a DRAM design expert, as head of the DRAM development office in the Memory Business Division, and Vice President Jung Ki-tae as Chief Technology Officer (CTO) of the Foundry Business Division. Dongwon Kim, a researcher at KB Securities, said, "The targeted personnel changes replacing the heads of DRAM and Foundry development are expected to enhance competitiveness."

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