Samsung Electronics Co posted a record US$3.4 billion loss at its pivotal memorychip division, but said it expects the global tech industry to begin emerging from its downturn later this year.
It joined SK Hynix Inc in predicting some relief from a broad tech recession that has hit the world’s biggest names from Apple Inc to Intel Corp.
Asia’s largest electronics company yesterday said it expects demand to gradually improve in a range of markets from smartphones to PCs and storage, driven by a Chinese economic recovery and accelerating artificial intelligence (AI) development.
Photo: REUTERS
Samsung, which supplies chips to Apple while making the iPhone’s closest competitor, reported net income of 1.4 trillion won (US$1.04 billion), lagging the 1.45 trillion won average analyst estimate.
Its semiconductor division, typically its largest, posted an unprecedented loss of 4.58 trillion won. Its shares were largely unchanged in Seoul trading.
“The memorychip industry has likely passed the worst of weak demand” in the first quarter, Bank of Singapore investment strategy head Eli Lee said. “Higher-end memory sales will continue to support pockets of demand, especially in 2H23 due to new smartphone launches and AI demand expansion.”
Samsung plans to maintain investment in memory chips at about last year’s level, because it is seeking to safeguard its longer-term competitiveness.
That is despite promising a “meaningful” cut in semiconductor production, a reduction aimed at stabilizing collapsing chip prices.
The South Korean company has historically aimed to spend throughout recessions to protect its lead.
The unusual move, twinned with more upbeat predictions about PC and phone demand, had spurred hopes that the industry would climb out of its trough this year.
Spot memory prices rebounded for the first time in 13 months, shortly after Samsung’s announcement.
On Wednesday, Hynix added to that sentiment after reporting a drop in revenue that was not as bad as feared, and saying it sees memory prices bottoming out in the current quarter.
Micron Technology Inc, the largest US maker of memory chips, said client inventories were declining.
Samsung posted its slimmest operating profit since 2009 just a few weeks ago. Any sustained recovery might hinge on an economic rebound in China, the world’s largest market for PCs and smartphones. That recovery has been uneven, but is gaining steam.
“In the second half, the smartphone market is expected to increase both in volume and value amid signs of a global economic recovery,” it said in a statement.
Samsung stayed in the black during last month’s quarter, in part because its new Galaxy S23 phone series bucked the overall smartphone slump. The mobile division posted a 3.9 trillion won operating profit in the quarter.
Longer term, investors remain transfixed on how a US-China conflict might affect the industry. Beijing launched a review of chips from Micron in March, inciting concerns about a backlash toward US companies and possibly US allies.
China is among South Korea’s largest export destinations, and a key market as well as a production base for Samsung and Hynix.
South Korean President Yoon Suk-yeol is touring the US capital this week, and discussions are likely to center on South Korea’s role in US curbs on exports to China, part of Washington’s effort to contain its political rival.
A blockade on shipments of chipmaking equipment threatens to curtail Samsung’s memory operations in China.
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