by Lee Dongwoo
Published 26 Apr.2020 15:54(KST)
[Asia Economy Reporter Dongwoo Lee] Despite the domestic semiconductor industry managing to hold up its performance in the first quarter amid the adverse effects of the novel coronavirus disease (COVID-19), concerns are rising that the impact may intensify from the second quarter onward.
According to the industry on the 26th, Samsung Electronics posted a preliminary operating profit of 6.4 trillion won in the first quarter of this year, nearly 3% higher than last year, and SK Hynix recorded an operating profit of 800.3 billion won, exceeding market expectations.
The industry explained that the strong first-quarter performance was largely due to increased sales of server products as the untact market expanded because of COVID-19. Additionally, the depreciation of the Korean won also played a partial role.
However, concerns are growing that if COVID-19 prolongs, negative effects such as sluggish sales could worsen. Jinseok Cha, Chief Financial Officer of SK Hynix, mentioned during a conference call on the 23rd, "Due to COVID-19, it is impossible to maintain normal business operations, and even basic management activities such as forecasting future demand are difficult."
In fact, market research firm IC Insights recently forecasted in a report that global semiconductor shipments will decrease by 3% this year compared to the previous year, marking the first time in history that shipments will decline for two consecutive years. Semiconductor shipments showed a year-on-year decline four times in 1985, 2001, 2009, and 2012, but then experienced six consecutive years of growth from 2013.
Although the prevailing outlook is that DRAM prices will maintain an upward trend until the first half of the year due to server demand, opinions are divided on whether memory price increases will continue in the second half.
SK Hynix’s decision not to provide an annual guidance was also attributed to the unprecedented uncertainty in the global market outlook.
According to the Korea Customs Service, exports from the beginning of this month until the 20th amounted to $21.729 billion, down 26.9% compared to the same period last year. The average daily export was $1.5 billion, a decrease of 18.6% compared to the same period, indicating that the export shock caused by COVID-19 is intensifying.
The industry plans to prepare for timely responses through technological innovation and infrastructure development when growth momentum centered on fifth-generation (5G) mobile communications and servers emerges.
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