Falling profits didnt force Samsung to cut capital spending

Falling profits didn’t force Samsung to cut capital spending

Last Friday, Samsung Electronics admitted that its operating profit for the most recent quarter could have fallen 69% year-on-year based on preliminary data. Fourth-quarter earnings were worse only in 2008, as the global financial crisis raged. At the same time, Samsung’s opponents point out that the company has not yet shown any intention to reduce capital expenditures.

    Image Credit: Nikkei Asian Review, Kotaro Hosokawa

Image Credit: Nikkei Asian Review, Kotaro Hosokawa

Many semiconductor manufacturers have reduced costs under similar conditions. Micron Technology is poised to cut capital costs by 40%, SK hynix will more than halve them, and Japanese company Kioxia plans to cut production volumes. Taiwanese contract manufacturer TSMC was also forced to cut its capital expenditures by 10% last year, despite showing high resilience to negative economic developments until recently.

After Nikkei Asian Review, South Korean giant Samsung Electronics, which remains the world’s largest memory chip maker, has not reduced its device purchases, most notably in the advanced lithography solutions segment. According to sources, Samsung will try to take advantage of the drop in demand for devices to get more favorable terms for its delivery, including price negotiations and priority shipping. The company’s advanced manufacturing facility in Pyeongtaek is expanding at an accelerated pace. The third plant in the region began operating in September and construction of the fourth is now being completed. A total of six companies for the production of chips will be located here. At the end of September, Samsung had about $101 billion in free funds, so it can afford to continue implementing investment programs even under difficult macroeconomic conditions.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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