Due to Sluggish Demand
The operating rate of Korean information technology (IT) companies fell in the third quarter of this year. They include Samsung Electronics. Its smartphone factory utilization rate hit a record low.
Samsung Electronics’ handheld player (HHP) factory utilization rate stood at 72.2 percent, down 8.1 percentage points from 80.3 percent in the same period of last year. This means that only seven out of 10 production lines were in operation in the third quarter of this year.
This is the lowest level since 2010 when Samsung Electronics began disclosing its HHP plant utilization rate separately. Prior to 2010, HHPs were included in the telecommunication category and its factory utilization rate was calculated separately. But at the time, the utilization rate topped 100 percent. The operating rate of visual device factories also fell from 79.1 percent to 75.4 percent during a one-year period.
The company's plant utilization rate is falling as inventory is piling up due to a drop in global demand. Samsung's current inventory assets amounted to 57,319.8 billion won, up 38.5 percent from 41,384.4 billion won at the end of 2021. Its inventory of memories DRAMs, NAND flashes and IT products is worth 16 trillion won.
According to LG Electronics’ quarterly report on the third quarter of this year, the company’s factory utilization rate also fell. Its factory utilization rate went down from 129.7 percent a year ago to 113.3 percent for refrigerators, from 105 percent to 88 percent for washing machines, from 113.2 percent to 102.9 percent for air conditioners, and from 96.4 percent to 81.1 percent for visual devices.