Hyundai Motor Surpasses Samsung Electronics in Operating Profit for First Half... Is Korea's Leading Company Changing?

Hyundai Motor Leads Domestic Operating Profit in First Half
Samsung Electronics Struggles in Semiconductor Market, Weak First Half
Quarterly Turnaround Expected if Semiconductor Cycle Improves in Second Half
Hyundai Motor Ahead in Annual Operating Profit Consensus This Year
Semiconductors and Automobiles Drive Korea's Export Growth Together

Hyundai Motor Company surpassed Samsung Electronics to become the most profitable company in the first half of this year. This is the first time in the 21st century that Hyundai's operating profit for a single company has exceeded that of Samsung Electronics for a half-year period. While Samsung Electronics experienced fluctuations amid the semiconductor downturn cycle this year, Hyundai quickly responded to the shift to electric vehicles and increased sales of eco-friendly cars, mainly in advanced markets. Furthermore, forecasts have begun to emerge that Hyundai will overwhelmingly surpass Samsung Electronics in total operating profit for the entire year. Hyundai has issued a challenge for the position of Korea's representative company.

According to the earnings announced by each company on the 27th, Hyundai's operating profit for the second quarter increased by 42% year-on-year to 4.2379 trillion won, while Samsung Electronics' dropped by 95% to 600 billion won. On a half-year basis, Hyundai posted 7.8306 trillion won, and Samsung Electronics 1.2 trillion won, with Hyundai leading by more than 6 trillion won.

This is the first time since the introduction of the electronic disclosure system in 1998 that Hyundai's operating profit has surpassed Samsung Electronics' on a half-year basis. Hyundai is also highly likely to overtake Samsung Electronics for the full year. According to FnGuide, Hyundai's operating profit forecast for this year is 13.7812 trillion won, a 40% increase from the previous year, while Samsung Electronics is expected to decline by 78% to 9.203 trillion won.

Although the semiconductor cycle is expected to reverse upward from the second half, with Samsung Electronics likely to reclaim the top spot in domestic corporate operating profit from the third quarter, it is analyzed that it will be difficult to close the gap that opened in the first half. The operating profit forecast for the third quarter is 3.117 trillion won for Hyundai and 3.4305 trillion won for Samsung Electronics. For the fourth quarter, Hyundai is expected to post 3.2334 trillion won, and Samsung Electronics 4.7044 trillion won. Samsung Electronics will regain the top domestic company position in the second half, but due to the large performance gap in the first half, Hyundai is expected to lead in overall annual results. If predictions hold true, 2023 could mark the first time Hyundai surpasses Samsung Electronics to claim the position of Korea's leading company. Of course, many believe Samsung Electronics will not easily relinquish its throne as Korea's top company.

Samsung Electronics is expected to bottom out in the first half of this year and enter a recovery cycle in the second half. Memory semiconductors are an industry with clear boom and bust cycles. The deeper the valley, the higher the mountain. Once the industry cycle recovers, significant profit growth over a long period is possible. Semiconductor experts believe the effects of production cuts implemented in the first half will become fully visible from the third quarter. Semiconductor prices are highly volatile. They can plummet unexpectedly but can also surge dramatically. It is too early to make a definitive judgment on Korea's top company in 2023.

The share of semiconductors in Korea's exports has gradually increased from 10.9% in 2010 to 18.9% in 2022. Korea is undisputedly a semiconductor powerhouse. However, there was a weakness in being overly dependent on semiconductors. It was like riding a unicycle with only a semiconductor wheel. When semiconductor prices plummeted, the entire country suffered. But now the situation is changing. In the first half of this year, the share of automobile exports reached 15.4%, surpassing semiconductors at 14.1%. If the semiconductor industry recovers in the second half, the Korean economy can run more stably on two wheels: semiconductors and automobiles.

Da-eun Lee, a researcher at Daishin Securities, said, "The main causes of Korea's export slump, namely exports to China and the decline in semiconductor prices, passed their bottom in the second quarter. Depending on the strength of improvement in these two factors, Korea's exports are expected to show either a V-shaped or L-shaped recovery."

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