Samsung Raises Operation Rates of Semiconductor

Apr 12, 2016

Samsung Electronics is focusing on the improvement of its profitability by raising the plant operation rates as much as possible while reducing product lines. Last year, the company’s average operation rate in four sectors reached 93.8 percent. It is also related to the increase in earnings in the first quarter of this year despite the decrease in sales.

Samsung Electronics has reduced the production capability of TVs and cellphones, which are currently in low demand, while increasing the capability of semiconductors and display panels. In particular, its semiconductor plant has recorded 100 percent of the operation rate, contributing to the improvement of performance.

According to the Financial Supervisory Service and Samsung Electronics on Apr. 11, Samsung Electronics’ production capability of TV in the Consumer Electronics (CE) division and mobile phone in the Internet and Mobile Communications (IM) division last year amounted to 50.45 million units and 497.05 million units, respectively, down 20 percent and 5 percent from the previous year. Notably, the figure of TV decreased to the level of 2010, which totaled 45 million units.

In fact, the global TV market is getting smaller. Samsung Electronics produced 45.82 million TVs last year, showing a decrease of 17 percent compared with the previous year. The company also reduced the production of cellphones by 4 percent last year due to the growing competition and lower demands.

 It has led to the improvement in operation rates, which represent the actual output compared to the production capacity. The company’s TV production plant operation rate rose as much as 91 percent last year for the first time from 87 percent a year earlier. The figure of mobile phone production plant also slightly grew to 85 percent.

On the other hand, the production capability in the memory sector skyrocketed last year based on its world’s best technology. Its figure increased 55 percent to 268.63 billion units last year from 173.51 billion units a year ago. It also showed a whopping 130 percent growth from 116.81 billion units two years ago.

During the investor relations (IR) event in 2014, Samsung Electronics said, “In 2016, most DRAM chips will be produced in 20nm processing technology.” The company greatly expanded its 20-nm processing lines last year. Since it has recently started the mass production of 10nm-class DRAM chips, its capability this year will grow further, according to industry sources.

The operation rates in the memory chip and display panel sectors stand at 100 percent and 99 percent. Its memory and display panel production plants didn’t stop even a day last year as their employees worked in three shifts around the clock.

An industry official said, “When taking a look at Samsung Electronics’ performance figures in the first quarter, the company saw stable earnings despite declining sales. It shows Samsung Electronics’ effort to maximize profits through an aggressive profitability management strategy.”

Source: BusinessKorea