On April 27, Samsung Electronics reported an 18 percent drop in first-quarter sales and a net profit of KRW 1.575 trillion (USD 1.18 billion), down 86 percent from a year earlier. Samsung Electronics Device Solutions (DS) division, which is responsible for the chip business, posted a massive operating loss of KRW 4.58 trillion (USD 3.4 billion), its first loss in 14 years. Chip inventories rose sharply amid reduced global demand.
Memory giants are under more pressure to perform in the face of tough market conditions. Just a day before Samsung announced its results, another major South Korean memory chip giant, SK Hynix, released its financial results for the first quarter of 2023, posting revenues of 5.09 trillion won (about USD3.8 billion), down 34% sequentially and 58% year-on-year; a net loss of about KRW2.59 trillion (about USD1.9 billion); and a net loss of about KRW3.72 trillion in the previous quarter, two consecutive quarters of losses. For the quarter, SK Hynix's operating loss reached 3.40 trillion won, a record single-quarter operating loss for the company.
SK Hynix CFO Kim Youhyun said that the memory chip market is still in a tough state but seems to be bottoming out, SK Hynix said it expects sales to pick up in the current quarter and the memory chip market situation is expected to improve from the second half of this year. Hynix said customers' chip inventories fell throughout the first quarter after the industry underwent a series of production cuts. The company also said that the decline in customer memory chip inventories indicates that the production cutback measures initiated last year are gradually taking effect.
Outside of the two major South Korean memory chip makers, U.S. memory chip maker Micron reported on March 29 that its revenue for the second quarter was USD 3.69 billion, compared to USD 4.09 billion in the previous fiscal quarter and USD 7.79 billion in the same period last year, a decline of about 53% year-over-year. Micron Technology reported a loss of USD 2.31 billion for the second quarter, including an inventory loss of over USD 1.4 billion, or USD 2.12 per share. Micron CEO Sanjay Mehrotra said, "The industry is facing the most severe recession in the last 13 years.
Micron, SK Hynix, Samsung has announced the latest financial results, memory chip market conditions in the year and the medium and long term have made a preliminary conclusion. Samsung said chip demand is likely to continue to be sluggish in the second quarter, and then gradually recover in the second half of the year. SK Hynix said the memory chip industry will come out of the doldrums later this year as China's economic recovery and artificial intelligence drive demand. China is the world's largest market for personal computers and smartphones, and its economy is now recovering, fueling optimism in the chip market, while the global boom in artificial intelligence will also drive demand for data centers and servers that rely on high-density memory chips.
Data from Tiburon Consulting shows that in the fourth quarter of 2022, Samsung Electronics, SK Hynix, and Micron Technology will be the top three players in the global DRAM market with market shares of 45.1%, 27.7%, and 23.0%, respectively; in the NAND market, Micron Technology will rank fifth with a market share of 12.3%; Samsung Electronics and SK Hynix will rank first and third with market shares of 31.4% and 18.5%, respectively. Memory chips as a bulk class of chip products, widely used in mobile phones, personal computers, servers, etc., are regarded as a leading indicator of the economy, the current demand reflects the economic outlook for the next six months.