[Corporate Inventory Crisis] Semiconductor Growth at 0% Range Next Year... Struggling with Inventory

Samsung Inventory Assets Surpass First 50 Trillion Won... SK Hynix Also Increases by 33%
Semiconductor Inventory in July Rises 12.3%, Inventory Rate at 95.7%
D-RAM Fixed Transaction Price Forecast for 4Q Falls to $2.50

As the global economic downturn directly impacts demand and prices for memory semiconductors, companies are struggling with accumulating inventory. This indicates a large volume of unsold products, and with forecasts suggesting that the semiconductor market?one of Korea's key export sectors?will see zero growth next year, concerns are rising that this will not only hurt corporate profitability but also deal a severe blow to the Korean economy.

According to the semiconductor industry on the 16th, as of the first half of this year, Samsung Electronics' total inventory assets amounted to 52.0922 trillion won, an increase of 1.0778 trillion won (26%) compared to the end of last year. This is the first time Samsung's inventory assets have exceeded 50 trillion won. Notably, the DS Division, responsible for the semiconductor business, saw a 30.7% increase. SK Hynix's total inventory assets during the same period reached 11.8787 trillion won, up 33.2% from the end of the previous year.

Analysts attribute this to the global economic recession and demand slowdown caused by inflation, which are adversely affecting the memory semiconductor market. Worsening consumer sentiment has led to increased semiconductor inventory among domestic companies, resulting in price declines. Memory accounts for 74% of Samsung Electronics' semiconductor sales and 97% for SK Hynix.

Signs of decline in the semiconductor industry are being detected in various areas. According to the Korea Development Institute (KDI), semiconductor production in July (seasonally adjusted) decreased by 3.4% compared to the previous month. The semiconductor industry operating rate index also fell 14.3% from the April peak (139.4) to 119.5. Due to these factors, semiconductor shipments in July dropped 26.1% year-on-year. Meanwhile, inventory surged by 12.3%, causing the inventory ratio to jump sharply from 63.0% in the previous month to 95.7%.

Price forecasts continue to show a downward trend. According to the Ministry of Trade, Industry and Energy, the fixed transaction price of DRAM this year fell from $3.41 in the first quarter to $3.37 in the second quarter. It is expected to decline further to $2.88 in the third quarter and $2.50 in the fourth quarter. NAND flash prices are also falling. Market research firm TrendForce reported that the fixed transaction price for 128Gb NAND flash used in memory cards and USBs in August dropped 1.67% from the previous month to $4.42, marking three consecutive months of negative growth since June.

An Ki-hyun, Executive Director of the Korea Semiconductor Industry Association, said, "Regardless of corporate activities, the macroeconomy itself is deteriorating, causing inventory to pile up and prices to fall. Since it is difficult to predict when the market will improve, this situation is having a negative impact on the domestic semiconductor industry."