Memory Demand Expected to Rise with Expansion of Corporate IT Investment
Samsung Electronics achieved a record high performance with annual sales exceeding 279 trillion won. On the 7th, Samsung Electronics announced that its preliminary consolidated results for last year showed sales of 279.04 trillion won and an operating profit of 51.57 trillion won. Employees are arriving at Samsung Electronics' Seocho office building on this day. Photo by Mun Honam munonam@
[Asia Economy Reporter Kim Jin-ho] The semiconductor industry, which showed weakness since the second half of last year, is expected to recover faster than anticipated this year. As expectations for an industry rebound grow, leading Korean semiconductor companies such as Samsung Electronics and SK Hynix are also expected to continue strong performance similar to last year.
According to business circles on the 2nd, there is growing optimism that the semiconductor market, centered on DRAM, will improve this year. This is due to the expected increase in memory demand driven by expanded IT investments by companies. The related industry views the period after the first quarter of this year as the turning point for the market rebound.
According to market research firm DRAMeXchange, the average spot price of PC DRAM (DDR4 8Gb) was traded at around $3.75 at the end of last month. Considering it was traded at around $3.58 at the end of December last year, prices have slightly increased. DRAM spot prices are transactions temporarily conducted through distributors and can be seen as retail prices; the recent price rise is interpreted as being influenced by increased server demand and companies reducing inventories.
US investment bank Morgan Stanley recently also forecasted that the semiconductor market might be less bad than expected. Given that it released a report titled "The Memory Semiconductor Winter is Coming" in August last year, this supports the outlook for a market rebound.
Furthermore, according to the Export-Import Bank of Korea’s Overseas Economic Research Institute, smartphone shipments are expected to increase by about 3% year-on-year to approximately 1.4 billion units this year, and investments in hyperscale data centers are expected to grow by 30% compared to the previous year.
NAND flash semiconductor prices are expected to continue declining until the first half of this year but may recover in the second half. According to TrendForce, NAND prices in the first quarter are forecasted to drop 8-13% compared to the fourth quarter of last year. This is because Samsung Electronics’ Xi’an plant in China, which had been halted due to COVID-19, has resumed normal operations, and the demand base has already secured sufficient inventory.
Meanwhile, the improved outlook for the semiconductor market is good news for Korean companies such as Samsung Electronics and SK Hynix. There is optimism that they can continue strong performance this year following last year. Both Samsung Electronics and SK Hynix set record-high sales last year.
According to FnGuide, the annual sales forecasts for Samsung Electronics and SK Hynix this year are approximately KRW 312.8426 trillion and KRW 50.0574 trillion, respectively. This represents an increase of 11.9% for Samsung Electronics and 16.4% for SK Hynix compared to the previous year.
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