Oversupply of Memory Chips May Lead to Billions in Losses for Samsung and South Korean Manufacturers in Q1 2023

According to The Korea Herald, due to the weak prices of memory chips and increasing inventory, Samsung and other South Korean chip manufacturers may incur losses in the first quarter of this year. 

Samsung reported that its inventory reached a historical high of 52.2 trillion won (39.9 billion USD) in the fourth quarter of last year, up from 41.4 trillion won the previous year. The company's chip business segment accounts for the largest share of its total revenue, with a revenue of 29.1 trillion won in 2022, up nearly 12.6 trillion won from the same period in 2021.

Another South Korean memory chip manufacturer reported a year-on-year increase of approximately 75% in its inventory during the same period, reaching 15.7 trillion won. This company focuses on DRAM and NAND flash memory chips, which make up over 90% of its revenue, making it more vulnerable to the impact of the current low market environment.

Market analysts have commented that the prices of PC DRAM and NAND storage chips are becoming closer to their cost, and KB Securities predicts that the prices of DRAM and NAND chips will drop by 19% and 18%, respectively, from January to March.

At a recent shareholder meeting, Samsung made a pessimistic forecast for its chip business this year but expressed its commitment to continue investing in clean rooms and technological advancements to overcome the challenges and turn the situation around. It's important to keep an eye on market trends and anticipate potential supply chain disruptions.