[Alpha Biz=(Chicago) Reporter Kim Jisun] Samsung Electronics and SK Hynix all announced additional cuts in memory semiconductors in the second half of the year.

The main goal is NAND Flash, which has a trillion-unit deficit. The decision is based on the judgment that major customers continue to adjust their inventories and that production should be reduced to improve their performance due to a clear drop in prices compared to DRAMs.

According to the industry on the 30th, both companies will start additional production cuts from the third quarter.

Kim Jae-joon, vice president of Samsung Electronics' memory division, said in a conference call after the second-quarter earnings announcement, "We will greatly adjust the decline in NAND output to accelerate inventory normalization."

SK Hynix also presented specific production cuts. SK Hynix said, "The NAND inventory level is higher than DRAM and profitability is worse," and added, "We will cut production by 5 to 10%."

Both domestic companies, as well as Japan's Kioxya and the US' Micron, are also participating in the cut, but demand is still sluggish. In addition, competition is intensifying as China's Changjiang Chunchu (YMTC) is trying to expand its market share with new technologies such as 232-layer layered NAND. The development of 3D NAND technology is also continuing to invest steadily.

It is after the fourth quarter of this year that the industry points out that additional reduction effects are revealed. Since it usually takes about six months to cut production, the semiconductor division is expected to recover its operating profit to the previous year's level in the first and second quarters of next year. Samsung Electronics' fourth-quarter operating profit consensus (average forecast) was 4.7044 trillion won, about eight times higher than its first-quarter operating profit of 600 billion won.

By early next year, when NAND prices slow down, it is expected to have a positive impact on price negotiations with customers.

 

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