SK Hynix Eyes to Slash Spending in 2023

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SK Hynix Inc is considering cutting its 2023 capital expenditure by about a quarter to 16 trillion won ($12.2 billion) in response to slower electronics demand than anticipated, people familiar with the matter said. The world’s second-largest memory maker is sticking largely with plans to spend about 21 trillion won this year building up DRAM and NAND capacity, the people said. But rising uncertainty over dwindling demand for the chips that go into everything from smartphones to servers has forced a rethink of expansions next year, they said, asking not to be identified talking about undisclosed plans.

The Apple Inc supplier’s shift comes as global tech companies sound the alarm over macroeconomic risks from rising interest rates, which are turning consumers off pricey gadgets. Hynix hasn’t made a final decision about capacity expansion plans, the people said. “We have not decided whether to change our CAPEX plan for next year,” Hynix said in a statement. Fellow memory maker Micron Technology Inc said at the start of this month that it plans to slow supply expansion next year and use existing inventory to fill part of the market demand. It expects CAPEX to decline year on year. Taiwan Semiconductor Manufacturing Co, the world’s biggest contract chipmaker, said on Thursday it could trim spending on expansion by as much as 9% this year from initial projections.

“We expect limited supply growth due to memory makers’ disciplined capacity addition, rising difficulties in memory fabrication, tech migration’s decelerating contribution to bit growth, and foresee supply-driven memory recovery throughout 2023,” Citi analysts wrote. Chip stocks including SK Hynix, Samsung and Micron have fallen more than 25% this year as companies wrestle with a potential global recession.

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But investors have recently bought back Samsung and TSMC, judging them as oversold. Last week, Korea’s largest company triggered an Asian stock rally when it reported a better-than-projected 21% jump in revenue. On the flip side, Micron warned of oversupply and gave a surprisingly downbeat forecast for the current quarter.


 

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Nishchay Pandey
Nishchay Pandey
Bioengineer with a knack for writing, I love IoT, Open-source and creativity.

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