Samsung risks serious losses in its semiconductor-related business segment. According to the latest data, the company lost the equivalent of 2 billion US dollars in this area from January to February 2023 alone. First of all, the losses are related to the collapse in demand for storage.
In addition, it is expected that the corresponding trend will continue. According to KoreaJoongAngDaily, Samsung’s operating loss could be about $3 billion in the first quarter of 2023, which is the first loss by the company’s semiconductor division since the fourth quarter of 2008, according to Sammobile. The global economic crisis is cited as one of the main reasons.
According to an industry source, custom chip manufacturing is highly profitable for the company. At the same time, its scale is not so large that it could significantly compensate for the large losses from the business related to memory production. The unfavorable development of the Device Solutions (DS) business unit is likely to have been influenced by the decline in semiconductor prices in late 2022.
In 2022, the semiconductor business accounted for most of the company’s operating income (23.8 of 43.4 trillion Korean won). After quarters, however, the picture was not so optimistic. So if the semiconductor segment’s operating profit was about $6 billion in the first quarter, $7.5 billion in the second, about $3.8 billion in the third, then it fell to about $200 million in the fourth – up 97% year-on-year.
Samsung Electronics reportedly borrowed about $16 billion to continue investing in the semiconductor industry from its own Samsung Display division, and in late December it reported that despite the economy slowing, it has no intention of reducing production rates — in anticipation an increasing demand the future.