The crisis has taken hold of the storage industry. After Micron and Kioxia, SK Hynix is also massively cutting its short-term spending, with the Asian media talking about up to 80 percent. The often mentioned and well-known pig cycle strikes once again in the DRAM sector.
Ultimately, SK Hynix is just like the other memory manufacturers. Everyone came out of the first half of the year extremely optimistic with a lot of momentum and presented extremely good figures. That's why the outlook for many companies at the beginning of July was a bit bleaker than before, but reality quickly caught up with them in the three months and now significantly larger adjustments are following. At SK Hynix, these should primarily affect the expenses for the near future, although the magnitude of up to 80 percent is a significantly different caliber than the only 30 percent reduction in expenses at Micron and 30 percent reduced capacity at Kioxia.
Everything should serve to reduce the oversupply and stop the fall in prices. Long term projects such as new factory builds are usually exempt as these are needed to be able to supply the market at the peak of demand – the ebb and flow of the hog cycle.
The view is directed to the industry giants
According to analysts, industry giants such as Samsung, Intel and TSMC are now rethinking their spending for the near future. Because the crisis is not only affecting the storage division. Despite being placed as a conglomerate, Samsung remains largely dependent on the semiconductor division and there almost exclusively on DRAM and NAND production, which accounts for around 30% of sales but more than 70% of profits. At least an adjustment in production is expected here, because forecasts currently see a significant drop in profits of around 25 percent.
Intel's forecasts have recently been anything but rosy, and we are excited for the end of October looked when the new quarterly report is in the house. At the latest there will be an official statement on planned expenses for the future. The same applies to TSMC, whose quarterly report is due next week. Current sales will break records there again, but the big question remains what will follow this year's CAPEX of $40-44 billion next year.