S. Korean semiconductor makers forecast to continue record earnings

By Lim Chang-won Posted : October 10, 2017, 09:19 Updated : October 10, 2017, 09:19

[Yonhap News Photo]


Helped by strong global demand and high prices, Samsung Electronics and SK hynix are expected to continue a record-breaking march in their earnings in the first half of next year, but experts warn of tough competition with Chinese rivals probably from 2019.

South Korea's semiconductor exports are expected to exceed 90 billion US dollars this year, compared to $62.2 billion last year, according to a report from the Korea International Trade Association.

Samsung, the world's leading memory chip maker, and SK hynix are required to make additional investments in memory chips as Chinese companies are making massive investments in semiconductor infrastructure.

By 2025, China has promised to invest about 165 trillion won and raise the proportion of domestic semiconductors to 70 percent. Experts said the investment plan would become fruitful from 2019.

"Samsung and SK hynix each account for more than 60 percent and 90 percent of quarterly operating profits from memory chips," a semiconductor industry official said, adding South Korean companies should get ready for competition.

A power vacuum caused by the arrest of vice chairman Jay Y. Lee has delayed Samsung's investment while SK hynix cannot change its profit structure quickly, the official said. "The government should support their innovation."

Market researchers predict Samsung's third-quarter operating profit may reach up to 15 trillion won, led by its semiconductor division. Hanwha Investment and Securities put Samsung's fourth-quarter operating profit for semiconductors at 12 trillion won.

SK hynix is forecast to post an operating profit of 3.8 trillion won in the third quarter and four trillion won in the fourth quarter.


 
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