Semiconductor manufacturers Samsung Electronics and SK hynix are set to post first-quarter losses due to weakening chip prices and increased inventory, posing challenges for both firms. Inventory assets at Samsung reached a high of KRW 52.2tn ($39.9bn) at the end of last year, compared with KRW 41.4tn in 2020, while SK hynix’s inventory reached KRW 15.7tn in the same period, marking an on-year increase of 75%. Demand for home appliances has lost momentum and aggressive rate hikes in major economies have weakened consumer spending, resulting in a sharp drop in chip prices. Despite the drop, Samsung says it has no plans to “artificially” reduce output and will keep up investment in its chips business, while SK hynix plans to cut production of low-profit products. Global chip suppliers have been cutting production to cope with worsening business conditions; Micron has reportedly cut DRAM and NAND wafer production by 20%, while Kioxia of Japan and Western Digital have each cut flash wafer production by 30%.
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