The increase in orders boosted the domestic economy immensely despite the fact that chip prices remained stagnant. (image: Samsung Electronics)
SEOUL, Oct. 26 (Korea Bizwire) — Samsung Electronics Co. and SK hynix Inc., the two major local players in the semiconductor industry, are set to post record-breaking growth in the third quarter in spite of various domestic and international hurdles.
Despite the controversy last year surrounding the price of semiconductor chips, which some experts claimed had peaked, the trade war with the U.S. and the uncertainty of the global economy, overall shipment orders for chips surged.
The increase in orders boosted the domestic economy immensely despite the fact that chip prices remained stagnant.
But as analysts predict that the growth of the semiconductor sector will be less bullish from next year onwards, many people within the industry are worried that the side effects of a slowed semiconductor industry could have very ill consequences, especially since the domestic economy is heavily reliant on the sector.
SK hynix, the world’s second-largest memory chipmaker, said yesterday that its July to September operating profits rose 73 percent year-on-year to 6.5 trillion won.
Meanwhile, as Samsung Electronics is expected to post its third quarter earnings next Wednesday, analysts predict that the electronics giant will report operating profits of over 13 trillion won.
Economists say such bullish results by both SK hynix and Samsung are helping the Korean economy stay afloat amidst a very bleak economic atmosphere.
Both companies are highly likely to post record-breaking profits for the year.
SK hynix and Samsung have been able to perform so well due to the increased demand for their memory chips. SK hynix announced yesterday that demand for its flash memory grew by 19 percent in the past year.
Despite the positive developments, critics are divided regarding the global outlook of the semiconductor market next year.
Those who remain optimistic state that despite the fall in chip prices, orders have increased, which indicates that the boom should continue.
Critics less optimistic about next year’s outlook say that the rise of Chinese competitors and the effects of the U.S.-China trade war could negatively trickle down to Korean semiconductor companies.
One source within the industry said that because Samsung Electronics and SK hynix have a technological advantage, the they should be less affected by the industry’s fluctuations.
“But the Korean economy’s heavy reliance on the semiconductor industry may become a burden at a later stage,” revealed the source.
H. S. Seo (hsseo@koreabizwire.com)
