Chipmakers-facing-declining-bottom-lines
Employees of Samsung Electronics check semiconductor products at the company’s memory chip factory in Korea. Photo courtesy of Samsung Electronics

Semiconductor makers struggle to find its feet

The world’s two largest memory chipmakers are struggling to find its feet in the fourth quarter due to due to the weak demand, according to Korean brokerages on Dec. 14.

KB Securities expected that business bellwether Samsung Electronics would chalk up $6 billion in operating profit during the October-December period, down 42.8 percent from a year ago.

Other major securities companies came up with similar expectations. DB Financial Investment projected that Samsung’s fourth-quarter profit would fall short of $6 billion for the first time in three years.

Things are worse for SK hynix as the world’s second-largest manufacturer of memory chips is predicted to rack up massive operating loss during the final three months of 2022.

Daishin Securities expected that the fourth-quarter operating loss of SK hynix would amount to $1.2 billion compared to the operating income of $3.2 billion a year before.

The falling memory chip prices weighed on the two tech giants along with No. 3 player Micron Technology of the United States as the virus pandemic-caused popularity of electronic devices fizzled out this year.

Against this backdrop, Deutsche Bank recently slashed its target for the stock price of Micron Technology from $60 to $55. Its stock fell more than 40 percent this year.

Analysts pointed out that memory makers should expect the pain to continue as the memory chip prices would stay weak next year.

KB Securities and DB Financial Investment said that the market would not turn around before the third quarter of next year.

“Memory chip suppliers are trying to adjust their excessive inventory pileup during the fourth quarter, which causes further decrease in the memory price,” Korean consultancy Leaders Index CEO Park Ju-gun said.

“The pandemic boom of the memory chips underpinned chipmakers in 2020 and 2021. But their bottom lines get worse as the pandemic is tamed. For the time being, they would have to face hardships.”

The share price of Samsung Electronics and SK hynix went up 1.48 percent and 0.34 percent, respectively, on Dec. 13 on the Seoul stock exchange.

Micron Technology share price edged up 0.87 percent on Dec. 12 to close at $55.35.

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The publisher studied Korean history in Seoul and management of business administration in the United Kingdom. He has 20-year experiences in the media business. Kim can be reached at voc200@gmail.com or 82-2-6956-6698.