SK Hynix is expected to surpass Samsung

Latest update time：2024-10-07

Reads：

????If you hope to meet more often, please mark the star ?????? and add it to your collection~

Source: Content compiled from businesskorea, thank you.

In a major development for the semiconductor industry, SK Hynix is expected to surpass Samsung Electronics in the memory market, driven by growing demand for high-bandwidth memory (HBM). The shift could mark a historic moment for SK Hynix, which has seen significant growth this year.

According to an industry insider report on October 17, Samsung Electronics is scheduled to announce preliminary third-quarter results on the 8th. Although detailed results of each business unit will not be disclosed, the Device Solutions (DS) unit responsible for the semiconductor business is expected to contribute more than 50% of the total results. 18 securities companies unanimously predicted that Samsung Electronics' average sales and operating profit in the third quarter will be 80.7849 trillion won (about 62.14 billion US dollars) and 10.357 trillion won, respectively. Among them, the memory business is expected to generate sales of 2 trillion won to 24 trillion won and operating profit of 5.2 trillion won to 6.3 trillion won.

In comparison, SK Hynix's third-quarter sales and operating profit are expected to be 18.1262 trillion won and 6.7679 trillion won, respectively. If these forecasts hold true, the operating profit gap between SK Hynix and Samsung Electronics' DS division in the third quarter is expected to be between 400 billion won and 1.5 trillion won. This performance surge is largely attributed to the growing demand for HBM, the next-generation DRAM that SK Hynix is pioneering.

Artificial intelligence technology innovation is an important driving force behind this potential overtaking. HBM is more expensive than general DRAM, which plays a vital role in improving profitability. As of the second quarter of this year, SK Hynix's operating profit margin was 33%, while Samsung Electronics' was 22.6%, making SK Hynix the industry leader in this regard.

SK Hynix recently started mass production of the industry’s first 12-layer HBM3E, following the earlier delivery of the industry’s first 8-layer HBM3E to Nvidia, a world-leading semiconductor company. The company plans to start supplying 12-layer HBM3E within this year to further consolidate its market position.

The outlook for the HBM business remains positive. According to a forecast by semiconductor market research firm TrendForce, "HBM will account for 10% of total DRAM bit production next year, and HBM's contribution to DRAM market revenue will exceed 30%." The company also noted that "in particular, HBM3E will account for more than 80% of total HBM demand."

If SK Hynix achieves the expected strong performance in the second half of the year, its annual operating profit could approach 23 trillion won, potentially surpassing Samsung Electronics' DS division by a narrow margin. This trend may continue into next year as fabless companies including Nvidia are increasing their supply of HBM3E.

The semiconductor industry, especially the memory market, is undergoing a major transformation. Historically, Samsung Electronics has dominated the memory semiconductor field. However, SK Hynix's advancement in HBM technology and its strategic supply chain management make it a formidable competitor.

Competition between SK Hynix and Samsung Electronics is expected to intensify as demand for advanced memory solutions continues to grow, driven by artificial intelligence and high-performance computing. The coming months will be crucial in determining whether SK Hynix can maintain its momentum and potentially dethrone Samsung Electronics as the memory market leader.

Samsung's profit may be lower than expected as memory cycle slows

Samsung Electronics' third-quarter results are expected to be lower than the securities market's expectations, with sales in the 80 trillion won range and operating profit in the 10-11 trillion won range. Despite strong demand for AI memory, a slowdown in the memory cycle and weak sales of flagship smartphones in the second half of the year are believed to be factors. Samsung Electronics is scheduled to announce interim results on the 8th.

According to the performance forecast (consensus) of securities companies on the 6th, Samsung Electronics expects sales in the third quarter to reach 81.388 trillion won and operating profit to reach 11.0379 trillion won, an increase of 20.6% and 353% respectively over the same period last year.

However, recently, the securities market has continued to lower its performance expectations for Samsung Electronics.

On the 4th, IBK Investment & Securities lowered its third-quarter sales forecast from 82.952 trillion won to 80.347 trillion won, and its operating profit from 13.148 trillion won to 10.158 trillion won. Earlier, Shinhan Investment & Securities lowered its previous forecast for third-quarter sales to 81 trillion won and operating profit to 10.2 trillion won on the 2nd.

After Samsung Electronics' operating profit fell below 10 trillion won in the fourth quarter of 2022, it recovered to the 10 trillion won range in seven quarters in the second quarter due to improvements in the memory industry. Since it was a profit surprise that greatly exceeded expectations at the time, the securities market also had high expectations for the third quarter, but due to the recent sluggish shipments and price declines of general-purpose memory, the forecast was adjusted.

Device Solutions (DS), which handles semiconductors, is expected to report operating profit of 5.4 trillion won in the third quarter, down 16% from 6.46 trillion won in the second quarter.

In addition to memory, system semiconductor and foundry businesses continue to lose money. According to securities sources, detailed operating profits for the semiconductor division are expected to be 4.04 trillion won for DRAM and 1.5 trillion won for NAND, while operating losses for foundry and system LSI are expected to be 500 billion won.

"The non-memory deficit widened from the previous quarter due to slowing demand for older (legacy) memory and a late entry into the high-bandwidth memory (HBM) market compared with competitors," said Kim Hung-tae, a researcher at Shinhan Investment & Securities. "This quarter, the DS division's operating profit fell from the previous quarter due to a decrease in the amount of one-time costs as well as provision write-offs and inventory valuation losses," he analyzed.

"Memory module companies' inventories increased to 12 to 16 weeks due to weak smartphone and PC sales in the third quarter, and memory shipments and price increases in the second half of the year are expected to be lower than initially expected," said Kim Dong-won, a researcher at KB Securities. "On the other hand, HBM, DDR5, etc." "Demand for memory from artificial intelligence and servers is believed to remain stable," he added.

In fact, according to the fixed transaction price of memory released by market research company RAM Exchange on the 1st, the average fixed transaction price of general-purpose DRAM products "DDR4 1Gx8" for PCs in September fell by 17.7% from the previous month. 1.7 US dollars per month. It is reported that the average price of general-purpose NAND products (128Gb 16Gx8 MLC) used for memory cards and USB also fell by 11.44% month-on-month to US$4.34 during the same period.

Park Yoo-hak, a researcher at Kiwoom Securities, said, "Memory shipments in the third quarter are expected to fall 2% for DRAM and 5% for NAND compared with the previous quarter due to increased inventory at customers, but overall price increases are expected to offset this and drive performance growth." "Compared with the previous quarter, average prices rose 8% and NAND prices rose 3%," he said.

Mobile (MX, NW) is expected to report operating profit of 2.6 trillion won in the third quarter, similar to the same period last year (2.23 trillion won). However, it is understood that sales of the Galaxy Z6 series of foldable phones, which Samsung Electronics aimed to rebound in the second half of the year, did not meet expectations.

The Home Appliance and Video Display Division is expected to report operating profit of 400 billion won, or flat to slightly higher than the same period last year. Samsung Display's third-quarter operating profit appears to have increased to 1.4 trillion won, compared with 1.1 trillion won in the same period last year, thanks to new smartphone launches by customers such as the iPhone 16 and Galaxy Z6. Harman's third-quarter operating profit is expected to be 300 billion won, down from 450 billion won in the same period last year.

Original link: https://www.businesskorea.co.kr/news/articleView.html?idxno=226385

END

????Semiconductor boutique public account recommendation????

▲Click on the business card above to follow

Focus on more original content in the semiconductor field

▲Click on the business card above to follow

Focus on the trends and developments of the global semiconductor industry

*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.

Today is the 3908th content shared by "Semiconductor Industry Observer" for you, welcome to follow.