Is Samsung's Second Half Promising? Signs of Recovery in Semiconductor Performance...

Semiconductor Production Cut Effects Become Visible
Display Peak Season + 'Galaxy Z5' Launch Effects Expected
Samsung Electro-Mechanics Forecasts MLCC Market Improvement

As global IT demand and business conditions gradually recover, Samsung Electronics affiliates are expected to deliver better performance in the second half of the year compared to the first half. Notably, Samsung Electronics, which recorded its worst-ever results due to the 'semiconductor winter,' is expected to reduce the scale of losses in its semiconductor business in the second half. Along with this, performance recovery is anticipated due to the display peak season effect and the launch of new products such as the 'Galaxy Z Flip5 and Fold5.' However, there are also forecasts that uncertainties in demand recovery due to macroeconomic risks will persist.

Photo by Yonhap News

On the 4th, the effect of memory production cuts in the second half by Samsung Electronics' DS (semiconductor) division is expected to become visible. Samsung Electronics began full-scale memory production cuts at the end of the first quarter. Considering that it usually takes three months from wafer input to memory chip production, the effects will appear 3 to 6 months later.

In addition, they are focusing on improving performance by expanding sales and new orders of high-value-added products such as ▲DDR5 ▲LPDDR5x ▲HBM3. They plan to strengthen mid- to long-term competitiveness by continuing investments in infrastructure, research and development (R&D), and packaging, as well as improving the completeness of the Gate-All-Around (GAA) process. In particular, Samsung Electronics intends to continuously expand supply capacity to meet the rapidly increasing future demand for HBM.

In the securities industry, losses in the DS division are also forecasted for the third quarter. However, it is expected to record losses in the range of 2 to 3 trillion won, less than the previous quarter. In the fourth quarter, operating losses are expected to shrink to the break-even point (BEP) level or possibly turn to quarterly profits for the first time in a year since the fourth quarter of last year. Securities firms predicting a DS division profit turnaround in the fourth quarter include ▲KB Securities (operating profit of 700 billion won) ▲Daishin Securities (522 billion won) ▲Kiwoom Securities (44 billion won).

Samsung Display Asan Campus visited by Chairman Lee Jae-yong.
Photo by Yonhap News

The DX (Device Experience) division plans to maintain solid profitability by launching major new products such as foldable smartphones, tablets, and wearables, and expanding sales of premium TV and home appliances. Above all, attention is focused on how much the highly anticipated 'Galaxy Z5' series in the second half can boost sales. So far, market reactions have been positive. Samsung Electronics held a pre-sale live broadcast for the 'Galaxy Z Flip5 and Fold5' on Samsung.com from midnight (0:00) to 1:40 a.m. on the 1st, achieving a record for the highest-ever sales of foldable smartphones.

Samsung Display is also expected to enjoy the peak season with the flagship smartphone launches from Samsung and Apple. Samsung Display is known to supply panels for Apple's four models of the 'iPhone 15'?standard, Plus, Pro, and Pro Max?as well as the 'Galaxy Z5' series. Minhee Lee, a researcher at BNK Investment & Securities, said, "Pre-production of new models for the second half began in June, and the seasonal peak effect in the third quarter is expected." She added, "Although macro uncertainties persist, performance is expected to improve in the third quarter due to the launch effect of the Z Fold5 new model." The consensus operating profit for Samsung Electronics on a consolidated basis in the third quarter (average securities firm forecast) is 2.9373 trillion won.

Power Inductor for Automotive Electronics by Samsung Electro-Mechanics.
[Photo by Samsung Electro-Mechanics]

Samsung Electro-Mechanics' multilayer ceramic capacitor (MLCC) business is expected to improve from the second half. It is analyzed that the shipment volume of MLCC, an essential component, is increasing as the generative AI and high-performance smartphone markets expand recently. The 'iPhone 15,' scheduled for release in the third quarter this year by Apple, includes more MLCC components due to upgraded specifications compared to its predecessor. Additionally, as domestic companies focus on developing generative AI services, data center construction is also expected to increase.

Rokho Kim, a researcher at Hana Securities, said, "Profitability is expected to improve compared to the previous quarter due to increased MLCC quantity and recovery of operating rates," adding, "Despite demand uncertainties, the trend of rising MLCC operating rates continues, so the opportunity to recover performance will come again."

Along with this, the supply of ultra-slim cameras for foldables to Samsung Electronics' 'Galaxy Z5' series is also a positive factor. They also plan to supply folded zoom cameras and others to smartphone manufacturers in the Greater China region.

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