Semiconductor outlook on an upward trend: Experts

The outlook for the semiconductor industry is improving, according to the latest survey conducted by the Korea Institute for Industrial Economics & Trade (KIET).

The institute's monthly Professional Survey Index (PSI) report, released on Sunday, gathered the opinions of 163 experts from financial firms and research institutions about the status of several industrial sectors, including chips, displays, automobiles, and shipbuilding, for June and their prospects for July.

By sector, the July prospects for chips, display, automobile, shipbuilding, and steel all topped the 100-mark. Semiconductor prospects, in particular, jumped 39 points to 119 compared to June. The number is the highest figure since June 2022's 123 points.

The report analyzes the monthly status of each sector and the forecast for the upcoming month. The score's base mark is 100, while 200 is the highest score. The closer the number is to 200, the more experts forecast that the sector will improve compared to the previous month, and the forecast dims the closer the figure gets to 0.

The industry outlook for chips has dramatically changed compared to the winter snap it suffered between January and February when the PSI score fell below 40. Experts say that the sector has hit rock bottom and is now rebounding.

“Cheaper prices lead to elasticity of demand and increase in shipments,” they said. “The impact from cutting the production of memory chips is clearly visible from the second quarter onwards.”

SK hynix and Samsung Electronics’ Device Solutions Division, which is in charge of its semiconductor business, are expected to report quarterly losses in the second quarter, with the latter between 3 and 4 trillion won ($2.2 billion-$3 billion) and the former with 2.8 trillion won. Analysts say that the losses will be smaller compared to those from the first quarter.

Prices of DRAM memory chips are on an upward trend, according to Taiwanese market tracker DRAMeXchange. The spot price of the 16-gigabyte Double Data Rate 4 (DDR4) climbed 0.77 percent compared to the day before to trade at $3.024 on June 21.

“Some customers are increasing their shipment orders due to the positive outlook that the semiconductor industry will improve in the latter half of this year,” said analyst Doh Hyun-woo of NH Investment & Securities. “Memory chip manufacturers' inventories are decreasing.”

More experts were certain that the economic environment for the semiconductor industry will improve from the third quarter of this year.

“As inventory decreases, chip prices will quickly normalize again,” they said. “Demand for artificial intelligence chips and chips from server clients will increase as well.”

The PSI for the overall manufacturing business surpassed 100 for the first time in three months to 102 in June. Domestic demand for the overall sector fell 1 point to 99 for June, but the export figure remains high at 107.

The PSI for investment climbed upwards for the sixth consecutive month to 97.

The ICT sector surpassed 100 to hit 106 for the first time since September 2021 and the index figure was particularly high for semiconductors, which jumped 35 points compared from the month before to 105 in June, the first time the number topped 100 since May 2022. Other sectors also recorded high figures that were above 100 — display with 127, automobiles with 115, and shipbuilding with 106.

Prospects for the overall manufacturing business for July are positive as well. The PSI for July is the same as June's at 104 points. Domestic demand retained its 100-point figure, and export increased by 1 point to 111 compared to the month before.

BY JEONG JONG-HOON [lee.jaelim@joongang.co.kr]