Unafraid of profit decline, Samsung Chairman Lee Jae-yong still insists on not cutting production

Against the backdrop of deteriorating profitability due to reduced memory demand, Samsung Chairman Lee Jae-yong seems to still insist on adopting a "no artificial production reduction" strategy.

According to the Korea National Daily, Samsung Chairman Lee Jae-yong recently held talks with Kyung Gye-hyun, head of the semiconductor business and Device Solutions (DS) department, Lee Jung-bae, director of the memory business, and other major leaders of the semiconductor business. It is reported that although some people raised the need to reduce production, Lee Jae-yong ultimately decided not to reduce production.

At present, Samsung Memory maintains the business tone of "non-artificial production reduction" and is conducting "natural production reduction" through process conversion and equipment updating. However, there are also opinions that before the tentative financial report for the first quarter of 2023 is released in early April, another meeting is likely to be held to adjust the strategy of not artificially reducing production.

According to securities industry sources, the DRAM and NAND Flash inventory levels of Samsung and SK Hynix have reached more than 15 weeks, far exceeding the normal value of about 3.5 weeks.

Despite this, Samsung still maintains production regardless of losses in order to strengthen its market competitiveness and get rid of late entrants. Memory companies such as SK Hynix and Micron are the first to bear the brunt. Industry analysis shows that Samsung still has balanced losses in other businesses such as mobile phones and home appliances. Micron's funds are relatively stable, and SK Hynix may suffer the biggest losses.

According to Seoul Economic Report, Lee Jae-yong recently visited China and not only inspected the Samsung Electro-Mechanics (Semco) laminated ceramic capacitor (MLCC) factory in Tianjin, but also met with Chen Min'er, Secretary of the Tianjin Municipal Party Committee, Samsung Display (SDC) President Cui Jushan, Samsung Electro-Mechanics President Zhang Pixuan and relevant people from the Tianjin Municipal Government all participated.

The industry believes that Lee Jae-yong may discuss domestic supply chain issues with Chen Min'er and propose a factory business cooperation plan to deal with the risks posed to Samsung by the United States' tightened semiconductor sanctions on China.

In addition, Lee Jae-yong also attended the Domestic Development High-Level Forum held in Beijing on March 25, 2023. It is said that although he briefly met with Apple CEO Tim Cook to exchange greetings, the two parties did not meet alone to discuss career issues.