Inventory assets balloon at Samsung Electronics, other Korean companies

A traffic light is amber in front of a Samsung Electronics building in Seocho, southern Seoul, on Jan. 6. [YONHAP]

Inventory assets at Samsung Electronics ballooned by 40.2 percent on year to reach 36.2 trillion won ($27.9 billion) last year due to weak consumer sentiment and an economic slowdown.

Samsung is only one of a host of Korean companies running record-high inventories. Competing chipmaker SK hynix holds 12.9 trillion won, up 82 percent on year.

On average, 212 of the top 500 companies that submitted earnings reports last year had 175.5 trillion won of inventory, 29.7 percent more than they did in 2021. The surge was tallied by business research institute Leaders Index.

The overall stockpile peaked at 177 trillion won in the third quarter and slid toward the end of the year. Finished products, half-finished products and works in progress were accumulated. The value of raw materials was not included.

The IT and electronics sector had the largest amount of inventory, worth 66.7 trillion won, adding 41.2 percent on year. Increases from Samsung Electronics, SK hynix and LG Energy Solution accounted for 93 percent of the sector’s hike.

Wafers have to wait up to eight months to hop on the semiconductor production line these days, according to industry sources. During the semiconductor super cycle between 2021 and 2022, wafers would be funneled as quickly as within a week.

Spring 2023 is cold for chip makers amid the sluggish memory semiconductor market. Samsung Electronics is expected to log trillions in operating losses in its first quarter preliminary earnings disclosure Friday. SK hynix announced it will issue over 2 trillion won worth of foreign exchangeable bonds to fund its business operation.

LG Energy Solution’s inventory rose 81 percent on year to 4.4 trillion won last year, while LG Electronics dropped 4.7 percent and LG Display 30.3 percent.

The food and beverage sector's inventory climbed 46.7 percent to 6.15 trillion won, which was the steepest hike among all sectors. Of the 22 food producers, snack brand Orion was the only company that shrank its inventory size. It dropped by 4.3 billion won, or 4.8 percent on year.

In the petrochemical sector, the total inventory of 30 companies rose 36.2 percent to 30.7 trillion won over the same period. LG Chem added 54.3 percent, and SK Innovation 64.6 percent.

For car and car parts producers, the inventory of 23 companies recorded a below-average increase of 20 percent, backed by a strong automobile market. Hyundai Motor reserves rose 27.1 percent to 8.59 trillion won, and Kia climbed 26 percent to 6.4 trillion won.

BY LEE HEE-KWON [sohn.dongjoo@joongang.co.kr]