According to foreign media reports, local time on Wednesday, SK Hynix in their three quarterly earnings report disclosed that they expect the oversupply of the memory chips market, will continue for some time, for this reason, they have also decided to cut next year’s investment and reduce production.
Specifically, SK Hynix announced in its earnings report that their investment next year will be cut by more than 50% year-on-year, and this year is expected to be in the range of 10-20 trillion won, while production cuts will be centered on less profitable products, gradually reducing production and maintaining the trend of reduced investment and production for a certain period of time to normalize the balance of supply and demand in the market.
From the latest reports of Korean media, SK Hynix is not the only one to cut investment or product production, in the case of high inventory, Samsung Electronics and LG Electronics are also cutting production of some products, and LG Display, another important company of LG, is also planning to cut investment.
In the report, foreign media said that Samsung Electronics is cutting production of smartphones, lowering the production target of smartphones, from 330 million units to 280 million units; LG Electronics is cutting production of TVs to control inventory.
LG Display, which posted an operating loss of 759.3 billion won in the third quarter, has said that they may cut their investment by more than 1 trillion won, with specific plans to be announced in January next year. LG Display, which has a clear advantage in large-size OLED panels needed for TVs and other applications, currently has an inventory worth nearly 4.5 trillion won, which they plan to reduce to 1 trillion won within the year.
Korean media also mentioned in the report that due to high inventory, major Korean manufacturing companies, are cutting back on output or investment, and the inventory-to-shipment ratio of Korean manufacturing in August has increased to 124 from 111 in the same month last year, higher than the level in 2008 during the global financial crisis, and second only to 127.5% in May 2020 during the pandemic.
