Inflation Hits South Korean Chip Production; Samsung Braces To Win Market Share Capitalizing On Downturn - Samsung Electronics Co (OTC:SSNLF), (HXSCL)

South Korea's chip production decreased for a fourth consecutive month in November, sliding 15% year-on-year for its most significant drop since 2009, Statistics Korea found.
South Korea's chip output was down 11% M/M as semiconductor inventories surged over 20% Y/Y, reflecting a supply glut as high inflation hit global demand for technology products after a two-year boom during the pandemic, Financial Times reports.
South Korea is a leading producer of microchips with companies like Samsung Electronics Co, Ltd SSNLF and SK Hynix Inc HXSCL.
"The slowing global economy and large inventories have hit demand. Customers are not buying chips as demand has collapsed," said JJ Park, an analyst at JPMorgan in Seoul told FT.
"Inventory destocking will be completed throughout next year, and the market could rebound in 2024."
Chipmakers slashed investment plans to adjust to the oversupply.
SK Hynix, U.S. rival Micron Technology, Inc MU, and Japan's Kioxia Holdings cut spending.
Industry leader Samsung stuck to its past strategy of increasing capital spending during the downturn to grab market share, analysts said.
"Samsung is back-stabbing its fellow oligopoly competitors," Dylan Patel, chief analyst at semiconductor research group SemiAnalysis, wrote. "Samsung is looking for a Pyrrhic market share victory."
Samsung's increased capital spending and chip production will exacerbate the global oversupply, analysts have warned.
"The oligopoly is broken, as Samsung's new chair wants to eat market share," Patel noted, warning of "pure carnage" in the DRAM (dynamic random-access memory) market.
Samsung will likely announce weaker fourth-quarter earnings next week.
Photo by Pierre Lecourt via Flickr

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