South Korea’s Samsung Electronics expects that the sharp decline in chip sales will continue into next year, which is the latest view of the semiconductor industry. A sharp pullback in sales of personal computers, smartphones and data servers weighed on the semiconductor industry and pushed related stocks sharply lower.

On Wednesday (September 7), local time, Kyung Kye-hyun, head of Samsung’s semiconductor division, said at a press conference that the second half of this year looks bad, and it seems that next year does not seem to show significant improvement momentum.

Kyung pointed out that as the world’s largest chip maker, Samsung will respond appropriately to the rapidly changing market environment. Earlier this year, industry executives generally believed that the second half of 2022 would be stronger than the first. But by the end of the spring, it became clear that instead of picking up, demand would slow down significantly, Kyung said.

Despite slowing market growth, Kyung said Samsung will continue to expand investment and R&D spending. He suggested that Samsung could use the downturn to grab more market share, as it has done during previous industry downturns. However, he did not elaborate further on this.

During the COVID-19 pandemic, the semiconductor industry has rallied to record growth as demand for tech products surged. That all changed this year, as the fallout from high inflation, rising interest rates and geopolitical tensions has sapped consumer and business spending, a decline that has caught many chip companies by surprise.

According to a recent forecast by the World Semiconductor Trade Statistics Organization, global chip sales are expected to increase by 13.9% this year to $633 billion, which is a drop from the previously expected increase of 16.3%.

The challenge is not only due to the decline in demand, but also American chip companies such as Nvidia and AMD are forced to reduce their exports, because the US government continues to abuse export control measures to restrict the export of semiconductor-related items to countries such as China and Russia. This will seriously affect the interests of American companies, and will also have an impact on the stability of the global industrial chain and supply chain and the recovery of the world economy.

To this, Kyung responded that we do not want to stand in the US-China conflict, but want to work hard to find a win-win solution for all parties, which we think is the right direction to move forward.

In response to slowing sales, chipmakers are also scaling back capacity expansion. Semiconductor market research firm IC Insights lowered its forecast for capital spending across the industry by 3 percentage points this year.

In terms of foundry business, Kyung admits that there are still many shortcomings, but it is expected that by the end of next year, Samsung’s chip foundry business will greatly improve.

According to market research firm TrendForce, in the first quarter of 2022, TSMC’s share of the global chip foundry market was 54%, more than three times that of Samsung.