Samsung and SK Hynix lose $16 billion in the semiconductor industry

The semiconductor giants Samsung Electronics and SK Hynix lost a combined total of about 21 trillion won, which is around $16.1 billion in their chip operations. The reason was said to be mainly due to the cyclical decline in the semiconductor sector in 2023. As we know, Samsung Electronics has risen to a great place and is now the world’s largest memory chip manufacturer. Despite this, the business reported a 77.6% YoY decline in sales during the quarter-to-quarter period. The reason behind this is the excessive supply of its products all over the globe.

The company’s semiconductor segment is the South Korean giant’s main source of income. Looking at the first three quarters of 2023, it is reported that Samsung’s semiconductor division reported an operating deficit of 12.7 trillion won. Electronic device needs, such as laptops and smartphones, did not increase even after the pandemic period was over. This is because of persistent economic uncertainty; the overabundance of memory chips started to hinder the worldwide semiconductor sector towards the end of 2022. The global leader in memory chip manufacturing, SK Hynix, was unable to avoid the downturn in the market in the same way.

Revenue for SK Hynix in the third quarter of 2023 fell by 17% on an annual basis. In the first three quarters of the current year, it suffered an operating deficit of 8.1 trillion won. On the positive side, the market for sophisticated memory chips, such as high-bandwidth memory chips for AI applications, is experiencing major economic growth. So this is showing signals of a recovery for the memory chip sector. The first half of the year’s production reductions have stabilized price falls and helped manage inventories.

From the second quarter to the third, Samsung’s operational profit increased by 262.6%. The operating profit for the first quarter went down by 85.15% compared to the previous one. While the operating profit for the second quarter rose by 4.68% from the first, Because of the losses SK Hynix faced in the first two quarters of this year, the business reported in its quarterly report that its dynamic random-access memory division earned a profit in the third quarter.