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| Samsung Electronics' semiconductor production facility in Hwaseong, Gyeonggi Province / Courtesy of Samsung Electronics |
Samsung vows to keep chip output, SK plans to produce less
By Jun Ji-hye
Samsung Electronics has made it clear that it is not going to cut production of memory chips despite a slowdown in the market industry and persistent uncertainties in the global economy.
The move by the world's largest memory chip maker is in contrast to decisions made by the second-largest and third largest semiconductor makers, SK hynix and Micron Technology, which have already announced plans to cut their output to cope with lower prices and weak demand.
During a conference call Wednesday to explain the firm's second quarter earnings, a Samsung official said, "We are not considering reducing wafer input deliberately. We will flexibly operate our production lines in accordance with changes in demand."
The comments come at a time when investors and market experts have been turning their attention to Samsung following SK hynix, which suffered an 89 percent fall in its operating profit during the second quarter from a year ago, announced July 25 that it would reduce production this year.
SK hynix said it will turn part of its DRAM fabrication line in Icheon, Gyeonggi Province, over to non-memory CMOS image sensors.
Samsung suffered a 55.6 percent decline in operating profit in the April to June period due mainly to the sluggish performance of the semiconductor segment.
The worsening performance resulting from a chip industry downturn and external uncertainties, such as the U.S.-China trade war and Japan's export regulations imposed against Korea, raised speculation that Samsung may join moves to cut memory chip production. But Samsung stated clearly that it is not going to reduce production.
"After Samsung Electronics announced it would not cut memory chip production, a number of investors are raising questions over the company's supply strategy," Samsung Securities analyst Hwang Min-sung said.
He noted that though Samsung is not openly moving to reduce production, the company could cut production by realigning its fabrication lines.
"I believe Samsung's announcement not to cut production was designed to clear up doubts about price-fixing," Hwang said.
Samsung, SK hynix and Micron, which dominate the global memory chip market, have been frequently embroiled in price-fixing allegations in the United States, Europe and China.
The Chinese government is investigating the three firms over allegations of fixing memory chip prices.
