Samsung Electronics’ sales in China totaled 28.31 trillion won in the first three quarters of this year whereas the same sales amounted to 43.38 trillion won in the same period of the previous year. During the period, its global sales fell from 131.57 trillion won to 117.39 trillion won and the ratio of its sales in China to its global sales fell from 33 percent to 24 percent.
The decrease in its sales in China has to do with a decline in semiconductor prices. In September this year, the contract price per 8Gb DDR4 chip fell from US$8.19 to US$2.94 in one year. Samsung Electronics’ consumer electronics and smartphone market shares are very low in China and most of its sales in China are derived from semiconductor products. In addition, its dependence on memory chips is very high in that market as Chinese companies are doing business only with Taiwanese companies such as TSMC and UMC in the foundry field.
In the other regions, the performance of the IT & Mobile Division of Samsung Electronics showed a significant improvement based on U.S. restrictions on Huawei. In the Americas, its sales edged down from 34.91 trillion won to 33.3 trillion won. The ratios of the division’s sales and operating profit to Samsung Electronics’ sales and operating profit rose from 38.6 percent to 43.4 percent and from 18 percent to 32.8 percent, respectively.
SK Hynix’s sales in China, in the meantime, fell from 11.90 trillion won to 9.63 trillion won from Q3, 2018 to Q3, 2019 while the ratio of its sales in China to its total sales rose from 39 percent to 48 percent. This is because its sales in the other regions decreased much more than its sales in China. For examples, the company’s sales in the United States, Taiwan and Europe dropped from 10.60 trillion won 5.80 trillion won, from 2.37 trillion won to 1.07 trillion won, and from 1.43 trillion won to 820.7 billion won, respectively.
The increase in the ratio of its sales in China is related to the U.S. restrictions, too. Micron Technology’s mobile and server DRAM supply to Huawei has been limited since May this year and SK Hynix’s products have replaced some of Micron Technology’s products since then. In addition, Chinese companies purchased memory chips in advance in Q3 before additional U.S. restrictions.
According to industry sources, both Samsung Electronics’ and SK Hynix’s ratios of their sales in China are likely to continue to fall as Chinese companies are increasing the domestic supply of DRAM chips for use in PCs, mobile devices and servers.