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Chipmakers Are All Pulling Back With Downturn - Except Samsung

(Bloomberg) -- Over the past two weeks, every major memory chipmaker has warned of a supply glut and tumbling prices, announcing it was time to slash capital spending.

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Not so market leader Samsung Electronics Co.

The South Korean giant said on Thursday that it sees widespread weakness in the semiconductor market with little sign of recovery until the second half of next year-- but it’s not going to pull back. Instead, Samsung is increasing its capital expenditures this year, in a move that would help it gain ground against rivals in the memory sector as well as against Taiwan Semiconductor Manufacturing Co.

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“Without a doubt, we are at a pivotal moment,” Samsung’s newly-appointed Executive Chairman Jay Y. Lee said in a statement. “Now is the time to act, to be bold and unwavering in our focus.”

Samsung will boost chip-related capital spending 9% this year to 47.7 trillion won ($33.6 billion) and vowed to stay the course on “preemptive” investments in topline chip gear. The company said capex will be lower in dollar terms because of the weak won, but it is pouring money into its logic chipmaking business, targeting TSMC.

“Samsung can do what it wants, as it is flush with cash,” Nomura Financial Invest Korea analyst Chung Chang-Won said.

Demand for memory chips has plunged worldwide, as client technology firms work through record-level stockpiles of chips, accumulated to meet demand amid pandemic-related supply disruptions and Russia’s invasion of Ukraine. Samsung said prices of both its NAND and DRAM memory fell by around 20% in the three months ended in September, echoing rival SK Hynix Inc.’s assessment of “unprecedented” market deterioration.

But while Hynix, as well as Micron Technology Inc. and Kioxia Holdings Corp. said they are slashing capital spending or chip output to cope, Samsung said it had no immediate plans to cut output, saying its scale gave it superior cost efficiency.

Quarterly net income at Samsung stood at 9.1 trillion won, missing the 9.4 trillion won consensus compiled by Bloomberg News. Profit in its chip segment was 5.1 trillion won, down 49% from a year ago.

Shares in Samsung were little changed after its earnings announcement, while rival Hynix shares fell by as much as 3.6%.

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