The operating profit of the semiconductor division of Samsung Electronics is expected to fall approximately 20% year on year to somewhere between 11 trillion won and 12 trillion won this year. Likewise, SK Hynix is predicted to show a decline of about two trillion won in operating profit this year. “Not only Samsung Electronics and SK Hynix but also non-Korean leaders of the global semiconductor industry such as Micron Technology are likely to suffer a decrease in profits in the first half of this year,” Meritz Securities explained.

According to Taiwanese market research firm Trend Force, the global semiconductor market is expected to show a negative year-on-year growth of 0.6% this year to end up at US$329 billion in size. Besides, according to IC Insights, the DRAM and NAND flash market segments are predicted to shrink by 6% and 1.6% from US$46.3 billion to US$42 billion and from US$32.2 billion to US$31.7 billion, respectively. DRAMeXchange recently mentioned that the unit prices of the devices would decline from US$3.38 to US$1.44 and from US$2.75 to US$1.52 between early last year and late this year.

TSMC and the other semiconductor memory manufacturers already recorded a significant de-growth last year, causing Korean semiconductor exporters to become nervous. The amount of their exports, which hit an all-time high for the third consecutive year in 2015 by exceeding US$62.9 billion, is likely to fall to US$61.2 billion this year according to the Korea International Trade Association.

SK Hynix and Samsung Electronics are planning to deal with the situation by means of technological strength. “Individual IT device markets are in the state of saturation but the demands for high value-added memory products are still solid based on the improvement of PC and smart phone specifications and server exchange needs,” SK Hynix said, adding, “We will apply the latest processing technology to all DRAM items by the last quarter of this year while starting the manufacturing of 3D NAND flash memories this year before increasing the production volume to an amount equivalent to 20,000 to 30,000 wafer sheets.”

They are focusing on high-performance mobile application processors and automotive semiconductor chips as well. Samsung Electronics is planning to develop a high-performance integrated chip on its own and apply it to the Galaxy S7. It also signed a supply contract with Audi for the automaker’s next-generation smart car. SK Hynix, on its part, recently started memory development for use in advanced driver assistance systems.

By: DocMemory
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