Samsung & SK Hynix: Semiconductor Inventory Trends
Samsung Electronics and SK Hynix, major players in the electronic components sector, are actively adjusting memory production. However, semiconductor inventory remains on the rise. In the first half of 2023, their combined inventory surpassed an impressive 50 trillion Korean won (about 37.4 billion USD).
Per reports from Korean sources, Samsung and SK Hynix's business reports for H1 2023 reveal that as of June, Samsung's Semiconductor and Device Solutions (DS) division holds an inventory of around 33.7 trillion Korean won. Meanwhile, SK Hynix's inventory stands at 16.4 trillion Korean won. Together, these numbers tally up to 50.1 trillion Korean won.
Comparing this to late 2022, both companies have seen their inventory grow during H1 2023, with Samsung's inventory expanding by 15.9% and SK Hynix's by 4.8%. The proportion of inventory assets to overall assets has also expanded, with Samsung's ratio moving from 11.6% to 12%, and SK Hynix's from 15.1% to 16%.
Looking ahead, both companies plan to reduce production in H2 2023, focusing on mature manufacturing processes. During the Q2 2023 earnings conference, SK Hynix announced a 5-10% additional reduction in NAND Flash production for the latter part of the year. Samsung also expressed its commitment to ongoing memory production reduction, with emphasis on NAND.
A noteworthy development is the recent report suggesting that Samsung is considering suspending part of its NAND production equipment at the P1 facility in Hwaseong, South Korea. This facility is a significant producer of 128-layer 6th-generation V-NAND series products. Unlike conventional production reductions where equipment remains operational without producing chips, Samsung's potential approach of directly stopping equipment operations is quite uncommon.
Beyond the Korean companies, Micron plans to increase its NAND production reduction from 25% to 30%, while Kioxia has already reduced production by 30% since late 2022.
Given the ongoing challenges in markets such as smartphones and consumer electronics, the industry foresees the global production reduction trend persisting for a substantial period.
