$21B Loss: Global Chip Titan Collapses Swiftly
As the so-called "Chip Alliance" led by the United States continues to impose blockades on our country's related industries, it seems that this blockade may soon be unable to sustain itself. Recently, there have been reports that industry leaders such as Samsung and Micron are facing operational difficulties, and Ren Zhengfei's prophecy seems to be coming true.
What has led these companies to suffer consecutive losses? Where will these companies go in order to survive?
The "Chip Alliance" is struggling to survive.
After the United States threatened the world's high-end chip manufacturers to decouple from China, the largest consumer market. Within this so-called "alliance," there has been a serious overcapacity.
The breakthroughs our country has made in the chip industry, as well as the new smartphone released by Huawei last year, have proven that our country's 7nm chips have successfully achieved domestication. The arrival of these news has made the situation for these big factories even worse.
According to reported information, last January, South Korea's chip inventory ratio reached as high as 265.7%, setting a record high in nearly 26 years.
Advertisement
The abnormal increase in this value reflects the poor sales of South Korean chips, leading to a large accumulation of chip inventory.
Data released by Yonhap News Agency shows that from January to March last year, Samsung Electronics' chip division suffered consecutive losses, with a cumulative loss amount reaching an astonishing 4 trillion won (approximately 21 billion yuan).
This is also the first time in sixteen years that the company has reported a financial deficit.In the first year following the end of the global pandemic in 2022, the economic rebound led to a significant increase in demand worldwide, resulting in a chip shortage across various products. Not only household appliances and electric vehicles, but also medical devices and personal computers faced difficulties in obtaining the necessary chips. The prices of some chips even skyrocketed to several times their original cost. Taking Hanxin as an example, some merchants used to spend only $10 to purchase a chip, but later the price rose to thousands of dollars.
Consequently, semiconductor manufacturers like Samsung seized the opportunity to collectively raise chip prices by 15% to 30%. However, the situation changed unexpectedly, and the once high-priced chips have now seen a significant price drop, with this year's prices even breaking the bottom line. Chips that were originally priced at $3,500 have plummeted to $600, and those that used to cost $200 are now available for just $20. Even the overseas chip giants have not been able to escape the fate of severe losses.
Why can't chips be sold?
To discuss the reasons why the once hot-selling chips are now unsellable, causing these major manufacturers to fall into their current predicament, we must go back to the beginning of the pandemic in 2020. The COVID-19 storm undoubtedly acted as a catalyst, driving the development of trends such as remote work and online learning, and leading to a surge in global demand for devices like desktop computers, tablet computers, smartphones, and home printers.
People no longer satisfied with simple information transmission and entertainment functions, but expected higher quality products with more application scenarios to effectively solve practical problems in life.Against this backdrop, chips, as the core components of electronic products, have become particularly crucial. Faced with such a sudden surge in market demand, the world's major chip manufacturers have increased their investment efforts to seize market share.
U.S. chip manufacturers such as Intel and Micron Technology have significantly increased their investment scale, intending to jointly develop new chip manufacturing bases and initiate a global "chip war."
Intel has invested over $20 billion to build new chip factories in the United States, while Micron Technology plans to spend $40 billion to create its own chip production line.
Similarly, South Korea's Samsung Electronics is also eager to capture a larger market share.
For mid-range flagship chips, although their initial pricing is high, market prices continue to fall. The reason is that our Chinese companies are increasing their investment efforts and enhancing the supply capacity of the global chip market.
In 2019, our country's expenditure on imported chips reached 2.8 trillion yuan, surpassing the import amount of oil and becoming the world's largest chip importer.
However, after years of being blocked by the United States, more and more Chinese companies have realized the importance of independently developing chips. With technological advancements and the continuous improvement of our government's support policies, our domestic chip manufacturing has made significant progress.
By this time next year, our country's domestic chip self-sufficiency rate is expected to reach around 70%.
In China's chip market, competitive companies such as HiSilicon and Unigroup have begun to emerge.
They strive to overcome difficulties, achieve a series of significant breakthroughs through continuous innovation and improvement. Among them, the representative ones are the HiSilicon Kirin series of mobile processors and powerful artificial intelligence computing engines.In the context of a global chip market where domestic enterprises in our country are actively participating, many foreign multinational corporations have opted for significant price reductions to compete for market share. Upstream components such as DRAM memory chips have plummeted to their lowest levels at a precipitous rate. Within just half a year, the price of DRAM has dropped from $2.25 per piece to $0.31 per piece.
Emerging manufacturers around the world have had to endure the severe impact brought about by the industry crisis. However, in the midst of this fierce competition, Chinese chip companies are not willing to be outdone. They have not only made technological breakthroughs but also demonstrated strong competitiveness in pricing.
Faced with the pressure of the imported chip market, our country's enterprises have adopted proactive strategies, developing mid-to-low-end chip products to meet the vast market demand. Through this approach, our chip manufacturers have gained the initiative in the global chip market.
The Chinese market is highly attractive. In retaliation against the so-called "blockade" by the United States, our country has also issued a "ban on purchases" for related American companies. In response to our country's reaction, Micron Technology has shown an unusually calm demeanor.
Recently, the company announced that it will make a higher amount of investment in one of its packaging and testing factories in Xi'an, Shaanxi, China, totaling 4.3 billion yuan. This has led to more speculation and attention regarding the subsequent actions of this international giant.
Despite the constant market turmoil, Micron Technology seems to still believe that the Chinese market has significant profit potential.Micron is looking forward to capturing the attention of our country's government by increasing investment efforts, with the hope of achieving the goal of lifting the ban, no longer being in a situation where they hold a lot of money but cannot make full use of it.
Obviously, Samsung has decided to actively maintain its position in the Chinese market and is determined not to easily give up market share to competitors.
Everyone knows that not long ago, Samsung suddenly announced that it was planning a big deal. It is said that this time they intend to sell all the ASML company's stocks they hold.
Surprisingly, the sale of these stocks is as high as an astonishing 1.2 trillion won - converted into the familiar RMB, it is about 6 billion yuan.
Such a large number, then what is the significance of Samsung's behavior?
For this question, professionals have given an answer, they believe that the real purpose of this transaction of ASML stocks is to enhance their own semiconductor technology strength and diversify investment risks.
It is revealed that the value of these sold stocks is about a part of the cost of Samsung Electronics' semiconductor technology renewal.
Faced with the current market competition and unpredictable situation, Samsung naturally understands that to maintain the leading position in the chip industry, it must quickly occupy a larger market share.
Not only that, but after Micron announced earlier that it would continue to increase investment efforts in China, Samsung also announced its latest investment plan without lagging behind.
Plans to invest about 180 billion yuan to build a new generation of chip production factories in Xi'an, China.It appears that Samsung is not only aiming to achieve its development goals through high technology but also hopes to leverage the vast potential of the Chinese market to further expand its business.
According to insiders, in addition to increasing its global chip production, Samsung's move is more importantly intended to gain recognition from Chinese consumers and to stay in the Chinese market as much as possible.
In this global "chip war," blindly following the footsteps of the so-called "chip alliance" led by the United States and withdrawing from the Chinese market will inevitably lead to a dead end.
Our country also needs to seize the unfavorable market opportunities within its own market in a timely manner, bravely challenge international chip giants, promote the vigorous development of its own chip industry, and create a market with unlimited potential.
Live a Comment