August 19, 2022 12:56
Unwanted computer chips, phones, TVs and washing machines are piling up in warehouses as private spending slows, leading to a sharp drop in factory operation.
According to semi-annual reports of Korea's top electronics makers, Samsung's inventory at the end of June this year totaled W52.92 trillion, up 26 percent from the end of last year (US$1=W1,321). This is the first time that Samsung's inventory value surpassed W50 trillion.
The semiconductor division's inventory mounted by 30.7 percent over the same period, while the smartphone and home appliance divisions' inventory increased 21.3 percent and the display divisions' 21.8 percent. As a result, inventory now accounts for 11.6 percent of Samsung's total assets, up from 9.7 percent at the end of last year.
The situation is the same at SK Hynix, where inventory increased 33.2 percent to W11.87 trillion as of the end of June.
Samsung has reduced the operating rate of its TV factories from 84.3 percent in the first quarter to 63.7 percent in the second quarter, and its smartphone lines from 81 percent to 70.2 percent.
LG also cut the operating hours of its factories for most home appliances like TVs, refrigerators, washing machines and air conditioners.
One industry insider said, "Falling demand and supply chain disruptions have led to excess inventory, so businesses are adjusting inventory flow and taking other measures to deal with it."
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