What about the ‘Dark Ages of Memory’… Samsung Electronics cuts its semiconductor sales forecast for the second half of the year by 30%

Samsung Electronics, the world leader in memory semiconductors, has significantly lowered its earnings forecast for the second half of this year to 30%. The main factors are the sharp drop in memory semiconductor prices from sluggish semiconductor demand due to the global economic downturn.

According to related industry sources on the 30th, a senior official at Samsung Electronics announced at a staff meeting held on the 28th of this month that the sales forecast for the second half of this year was 30% lower than the April forecast. This is as a result of falling to the 46 trillion won level from the 67 trillion won level in the Samsung Electronics semiconductor sales market consensus in the second half of April (average forecast from securities firms).

The memory semiconductor industry is trending down. According to a report recently released by TrendForce, a Taiwanese market research firm, inventories of major companies are seen soaring due to sluggish demand for memory semiconductors.

Accordingly, it is estimated that DRAM prices in the fourth quarter will decrease by 13-18% compared to the same period of the previous year. In the third quarter, DRAM prices were also predicted to fall by 10-15%. In addition, NAND flash prices in the fourth quarter are expected to decrease by an average of 15-20% compared to the previous quarter.

The sluggish demand for memory semiconductors can be attributed to concerns about global economic recession, slow server investment by data center companies due to inflation, and contraction in sales of IT devices such as smartphones and personal computers. TrendForce predicted that the average price of NAND flash in the third quarter will fall 13-18% from the previous quarter.

On the same day, Sanjay Merotra, CEO of US Micron, the world’s third largest DRAM producer, said, “In the fiscal year 2023 (September 2022 to August 2023), the amount of semiconductor wafer investment will be reduced 50% compared to the previous year.” He said he would prepare for a sudden drop in demand.

Meanwhile, at the end of June, the inventory of Samsung Electronics’ DS division, which is responsible for the semiconductor business, gained 21.507.9 trillion. This is an increase of 5.52.8 trillion won (30.7%) compared to the end of last year (16,455.1 billion won). In addition to Samsung Electronics, SK Hynix’s inventories also jumped 2.96 trillion won (33.2%) from 8,916.6 billion won to 11,878.7 billion won during the same period.