Samsung bucks trend and doubles down on semiconductors


The vendor says its continued investments will help it to gain market share when demand begins to rise again next year

When the coronavirus pandemic first struck back in 2020, it quickly wreaked havoc for production lines around the world. For the slow-moving juggernauts of the semiconductor industry, the impact was dramatic and immediate, forcing the closure of various fabs and creating a vicious supply crisis, the reverberations of which can still be felt to this day.

Now, roughly three years on, the semiconductor crisis is gradually easing for many customers, aided in no small part by favourable policies and subsidies promoted by governments, who increasingly view chip production as a key element of technological sovereignty.

Indeed, in South Korea, the world’s second largest semiconductor producing nation, chip manufacturers are now, ironically, facing a new challenge: oversupply.

Since the global economic downturn last year, demand for electronic goods has decreased dramatically, leaving the nation’s chipmakers with a significant surplus of memory chips.

At the end of last year, the South Korea’s chip production decreased for the fourth consecutive month, leading many manufacturers, including SK Telecom’s chip unit SK Hynix, to slash their manufacturing spending in response.

But Samsung, it seems, views this supply crisis reversal as an opportunity, saying they will continue to invest heavily in their semiconductor conductor business this year in anticipation of future demand.

The company spent around $38.8 billion on its semiconductor business in 2022 and said they would aim to do similarly in 2023.

“The market conditions this year are not favourable as consumer sentiment weakens and companies prioritise financial soundness amid inflation and higher interest rates,” said Samsung’s executive vice-president Jaejune Kim during an analyst call. “But this gives us a good opportunity to thoroughly prepare for the future. We will continue to invest in infrastructure to meet mid-to-long-term demand.”

Samsung says it expects demand to rise again towards the end of this year.

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