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Falling earnings did not force Samsung to cut capital expenditures.

Published: 2023-01-09

Last Friday, Samsung Electronics admitted that its operating profit for the past quarter could have declined by 69% year-on-year, based on preliminary data. Worse things with profits in the fourth quarter were only in 2008, when the world's financial crisis was raging. At the same time, Samsung's counterparties note that so far the company has not shown any intention to reduce capital expenditures.

Many semiconductor manufacturers under similar conditions have cut costs. Micron Technology is poised to cut capital costs by 40%, SK hynix will more than halve them, and Japan's Kioxia plans to cut production volumes. Taiwanese contract manufacturer TSMC was also forced to cut capital expenditures by 10% last year, although until recently it has shown high resilience to negative economic developments.

As reported by the Nikkei Asian Review, South Korean giant Samsung Electronics, which remains the world's largest manufacturer of memory chips, has not reduced its purchases of equipment, and this is most evident in the segment of advanced lithography solutions. According to sources, Samsung will try to use the decline in demand for equipment to obtain more favorable terms for its supply, including price bargaining and priority in terms of shipment. The company's advanced manufacturing site in Pyeongtaek is expanding at an accelerated pace. The third plant in the area began operating in September, and the construction of the fourth is now being completed. In total, six enterprises for the production of chips will be located here. As of the end of September, Samsung had about $101 billion of free funds, so even in difficult macroeconomic conditions, it can afford to continue implementing investment programs.