When the chips are down: Samsung boss warns of weakening demand
The global semiconductor industry may take a turn for the worse after years of steadily rising demand, the CEO of Samsung Electronics has warned.
Semiconductors, or computer chips, are used in most of today’s technology and are a critical component in electric vehicles.
“The second half of this year looks bad, and as of now, next year doesn’t really seem to show a clear momentum for much improvement,” co-CEO Kyung Kye-hyun, who heads Samsung’s semiconductors unit, told reporters on Wednesday.
An increasingly sluggish demand for computer chips comes as an economic downturn sweeps the globe. Demand peaked during the pandemic when consumer habits leaned towards new electronics during lockdown measures, instead of bracing for rising inflation and soaring energy bills.
“We need to build a big hotel to secure big customers,” Kyung continued, adding that Samsung will adjust investments to improve profit margins.
Samsung, the world’s largest chipmaker by revenue, is seeking to find a “win-win- solution” to the conflict between the US and China which has seeped into the semiconductor sector.
The South Korean electronics giant operates in both countries, and is currently building a $17bn (£14.8bn) facility in Texas. But the US’ $52bn Chips Act, which passed in August, can block companies taking advantage of Stateside subsidies from selling certain chips to unallied countries, such as China and Russia. It is unclear whether Samsung is receiving US subsidies.
Kyung said the company is looking to find a “common denominator” that benefits both parties, and wider supply chains.