Samsung Electronics reports decline in chip inventory

[Graphics by Song Ji-yoon]

Samsung Electronics Co.‘s chip inventory, accumulated during one of the worst industry downturns since late 2022, shifted to a decline and is raising expectations that the company’s memory division will turn a profit in the first quarter of 2024.

According to the company‘s 2023 business report filed on Tuesday, the inventory assets of the Device Solutions (DS) division, which is responsible for semiconductors at Samsung Electronics, totaled 30.99 trillion won ($23.58 billion) at the end of the fourth quarter of 2023. Inventory assets totaled 21.51 trillion won at the end of the second quarter of 2022 but jumped to 33.69 trillion won at the end of the second quarter of 2023, up 57 percent, and further increased to 33.73 trillion won at the end of the third quarter of 2023.

It is believed that Samsung Electronics’ strategies to reduce production, including DRAM and NAND production, coupled with a gradual recovery in demand for memory chips, contributed to the decrease in inventory. It is the first time in 10 quarters since the second quarter of 2021 that the DS business division reported a decrease in inventory assets, with inventory assets for all of Samsung Electronics‘ businesses decreasing by about 600 billion won year-on-year to 51.6 trillion won.

Although Samsung Electronics experienced one of the worst semiconductor downturns in recent memory, it invested about 53.1 trillion won in facilities, an amount similar to the record amount it spent in 2022. It also invested 28.4 trillion won in research and development, increasing R&D investment by 3.5 trillion won from the previous year.

Despite the company’s deteriorating performance, it increased the number of its employees to 124,804, up 3,400 from 2022. However, due to the underperformance of the semiconductor sector, the average employee salary decreased by 11 percent to 120 million won from 135 million won in 2022. The highest-paid employee last year was advisor Kim Ki-nam, who received 17.27 billion won, including 13 billion won in severance pay.

Meanwhile, Sebastian Seung, who led the company’s artificial intelligence (AI) strategy at Samsung Research, left the company. Seung is regarded as one of the top scholars in the field of brain neuroscience-based AI and has served as the head of Samsung Research since 2020 after joining the team in 2018.