Reuters ‘additional production cuts’ vs. Korean media ‘past inventory peak’ in Samsung Electronics’ 9 trillion won deficit in the first half
On the 27th, when Samsung Electronics announced its performance of a 9 trillion won deficit and a 95% drop in operating profit in the first half, Reuters reported that it “announced additional production cuts,” but the Korean media reported differently that “the inventory peak has passed.”
The U.S. Federal Reserve announced the interest rate hike on the same day, revealing the results of a survey that the biggest impact was a surge in car loans, housing interest rates and credit card interest rates.
Reuters reported that “Samsung Electronics announced a cautious stance on the global semiconductor outlook on the 27th and announced plans to expand production cuts as demand recovery is severely constrained by high-end chips used for artificial intelligence.”
'News 1' said, "Samsung Electronics explained that 'malicious inventory' of memory semiconductors, which was the biggest cause of sluggish performance, has been gradually decreasing since last May." It is confirmed that it has entered a decline after peaking."
Samsung Electronics suffered a loss of 4.36 trillion won in the second quarter due to memory inventory amid the semiconductor recession.
"We will extend production cuts and make additional output adjustments for certain products, including NAND flash memory chips used for digital data storage," Kim Jae-joon, vice president of Samsung's memory division, told analysts on the day of further production cuts.
Regarding the outlook for the second half of the year, Samsung Electronics said in a statement, "The production cuts across the industry are likely to continue in the second half of the year, and demand is expected to gradually recover as customers continue to remove (chip) inventories."
SK Hynix announced on the 26th that it had decided to “additionally reduce production by 5-10%” for NAND flash, saying that it had sales of 7,305.9 billion won and operating loss of 2,882.1 billion won in the second quarter.
SK Hynix's deficit has been three quarters in a row, and the loss in the first half (operating loss of 3.4023 trillion won in the first quarter) is worth 6.3 trillion won.
Samsung Electronics said in a statement that day, "We will accelerate the expansion of the proportion of high value-added fleet products."
The US Federal Reserve (Fed) unanimously decided on the 26th to raise the policy rate by 0.25% to 5.25-5.50% per year.
The Federal Reserve Board (FRB) said in its assessment of the economic situation that day, “The economic situation is gradually expanding with an upward adjustment from the previous’slight expansion’.”
"We will make our decisions based on the overall picture of the data coming out of each meeting and its impact on the outlook for economic activity and inflation," Fed Chair Jerome Powell said at a press conference on the same day, and said of his next meeting in September, "if the indicators are reasonable, interest rates We will raise it again, but we can leave it as it is.”
The Associated Press reported on the day that "no one has felt more pain than car buyers" about the rise in US interest rates.
A New York Federal Reserve study found that 14% of car loan applications were rejected over the past year from rate hikes, the highest rate since tracking began in 2013, the Associated Press reported.
Applicant denials for credit card, mortgage, mortgage refinancing and credit card limit increases have all increased since 2021, the New York Fed said. "Some of the denials are a direct result of the Fed raising interest rates, which is the most aggressive in 40 years." revealed
Credit card rates are close to all-time highs, mortgage rates have more than doubled in two years, and average new car prices are up about 25% from their pre-pandemic average, the New York Fed says rising interest rates are forcing some people to give up expensive purchases. and used car prices are 45% more expensive than before the pandemic.
Fed data shows that the average annual rate (APR) for credit cards is 22.16%, which is about 6 percentage points higher than the 2022 average.
The average annual interest rate for new credit cards is 24.2019%, the highest interest rate ever.
"No one should expect it to stop rising anytime soon," said Matt Schulz, senior credit analyst at LendingTree. "The scariest thing for credit card borrowers is that rates are actually rising faster than the Fed is forcing them to." Ira told AP.