Two major chip giants, losing $16 billion

Source: Semiconductor Industry Observation

    According to South Korean media reports, the combined losses of Samsung Electronics and SK Hynix chip businesses exceeded KRW 21 trillion (USD 16.1 billion), mainly due to the cyclical downturn in the semiconductor industry in 2023. The stock price of Samsung Electronics, the world‘s top revenue storage chip manufacturer in the third quarter, plummeted 77.6% year-on-year as its chip division (the group‘s cash cow) continued to be affected by global oversupply. Samsung‘s chip business incurred a cumulative operating loss of 12.7 trillion Korean won in the first three quarters of this year.

    Starting from the end of 2022, the oversupply of storage chips began to hinder the development of the global semiconductor industry, as demand for electronic devices, especially smartphones and laptops, did not rebound even after the pandemic due to sustained economic uncertainty.

    SK Hynix, the world‘s top storage chip manufacturer, has also failed to escape the impact of industry slowdown. SK Hynix‘s revenue in the third quarter of 2023 plummeted by 17% year-on-year, with a cumulative operating loss of 8.1 trillion Korean won in the first three quarters of this year. On the positive side, there are signs of recovery in the storage chip industry due to the surge in demand for advanced storage chips, such as high bandwidth storage chips for artificial intelligence applications. The production reduction measures implemented in the first half of the year helped to control inventory and stabilize price declines.