This Year’s Semiconductor Inventory Assets Evaluation

Cutbacks in memory production caused by the global semiconductor downturn are having an impact. Samsung Electronics, which officially implemented cutbacks from April this year, has seen a continuous increase in semiconductor inventory assets from the end of last year to the third quarter of this year, although the rate of increase has slowed down. On the other hand, SK hynix, which entered into cutbacks early on from the end of last year, has consistently reduced inventory assets from the first quarter to the third quarter of this year.

According to Samsung Electronics’ quarterly report for the third quarter of this year, disclosed on Nov. 14, the inventory assets in the Device Solutions (DS) division, which is responsible for the semiconductor business, amounted to 33.73 trillion won (US$25.69 billion). This marks a 16.1 percent increase from the end of last year and a 27.9 percent increase from the third quarter of last year. In the first three quarters of this year alone, semiconductor inventory assets accumulated to a value of 4.67 trillion won. The proportion of inventory assets to total assets also grew from 11.6 percent at the end of last year to 12.2 percent in the third quarter of this year.

The upward trend in inventory assets persists, but there is a noticeable decrease in the rate of increase. The quarterly progression of inventory assets is as follows: 29.06 trillion won at the end of last year, 31.95 trillion won in the first quarter of this year, 33.69 trillion won in the second quarter, and 33.73 trillion won in the third quarter. The rate of growth has gradually decreased with figures of 9.94 percent, 5.45 percent, and 0.12 percent for the respective quarters.

Unlike Samsung, SK hynix, which embarked on cutbacks earlier, has seen a reduction in inventory assets. According to the company’s quarterly report, inventory assets decreased by 4.8 percent to 14.95 trillion won from 15.66 trillion won at the end of last year. SK hynix’s inventory assets recorded figures of 15.66 trillion won at the end of last year, 17.18 trillion won in the first quarter of this year, and 16.42 trillion won in the second quarter, showing a downward trend throughout this year.

The proportion of inventory assets to total assets also dropped from 15.1 percent at the end of last year to 14.6 percent.

The inventory turnover ratio, which indicates the speed at which inventory assets are sold, decreased for both Samsung Electronics and SK hynix during the same period. Samsung Electronics saw a decrease from 4.1 times to 3.3 times, while SK hynix decreased from 2.4 times to 2.1 times. A higher turnover ratio indicates that inventory assets are being converted into sales more quickly.