With the semiconductor market in a downturn, Samsung Electronics and SK Hynix have seen their 1Q23 performances seriously affected. Although both companies are positive about a semiconductor market recovery in the second half of 2023, South Korean industries have had differing views and are paying close attention to future developments.
Korea's Nocut News pointed out that besides the aforementioned two South Korean chip giants, the South Korean market mostly favors a production-cut strategy for semiconductor suppliers. The effects will start to surface in the second half of 2023. However, they are also some who consider the thought of semiconductor demand beginning to recover in the second half of 2023 to be overly optimistic.
SK Hynix is the first semiconductor supplier to release the "2Q23 is the bottom" theory. It predicted that after the second quarter of 2023, the inventory of memory suppliers will start to decrease and the market environment can improve. Although it's difficult for memory prices to immediately bounce back in 2Q23, with production cuts and increased customer demand, it's expected that shipment in 2Q23 will see double-digit increases compared to 1Q23.
Samsung also made similar predictions. A vice president at Samsung's DS division previously pointed out that as Samsung reduces its production capacity, it's expected that starting in 2Q23, Samsung's inventory level will decrease. In addition, the customers' inventory will also start to decrease in the second half of 2023, leading to a recovery in demand.
Most in the South Korean semiconductor industry estimated that 2Q23 is the lower point for the semiconductor market. Compared to the end of 2022, Samsung's production cut is around 20-25%. South Korea's Kiwoom Securities pointed out that as memory demand in the second half of 2023 recovers, the possibility of a price rebound is slowly increasing.
On the other hand, most predictions believe that Samsung's operating profits in 2Q23 will be even worse than 1Q23, falling between KRW10 billion (US$7.54 million) to KRW500 billion (US$377 million).
SK Holdings, however, has a more pessimistic prediction, estimating that Samsung will report an operating loss of KRW300 billion in 2Q23. The last time Samsung reported an operating loss was in the fourth quarter of 2008 (a loss of KRW740 billion) amidst the global financial crisis.
On top of that, some have expressed doubts about the "memory market will recover in the second half of 2023" prediction. Shinhan Securities pointed out that as of now, they have been no clear message indicating that memory demand will fully recover.
