Samsung Electronics is experiencing varied financial impacts across its business divisions due to the recent decline in the won-dollar exchange rate. While demand and price increases for memory used in artificial intelligence (AI) servers are offsetting currency losses in the semiconductor sector, the mobile and TV & home appliance divisions are facing potential revenue declines.
As of recent reports, the won-dollar exchange rate is trading between 1,420 and 1,430 won. Although the easing of high exchange rate pressures has raised expectations for reduced costs across the industry, Samsung anticipates differing effects on its various business segments.
In the semiconductor division, the drop in exchange rates is not entirely welcome, as it reduces the won-denominated profits from dollar sales. A Samsung representative noted, "In the first quarter, the rise in major currency exchange rates, including the dollar, had a positive effect on overall operating profit."
However, the more direct influence on semiconductor performance comes from market conditions rather than exchange rates. In the second quarter, Samsung's semiconductor division reported an operating profit of 89.2 trillion won, driven by strong demand for server DRAM and enterprise SSDs due to increased investment in AI data centers, along with a rise in shipments of high-value products like high-bandwidth memory (HBM).
Looking ahead to the second half of the year, forecasts suggest that demand and pricing in the semiconductor sector will largely offset the burdens of currency fluctuations. KB Securities predicts that memory prices will rise by at least 30% in the third quarter, with long-term supply contracts from AI server clients helping to stabilize prices.
In contrast, the mobile division is struggling. Samsung's mobile business reported an operating loss of 700 billion won in the second quarter, largely due to soaring memory prices increasing smartphone production costs. While the decline in exchange rates may lower some import component costs, it also reduces the won-denominated value of overseas sales.
The TV and home appliance sectors are similarly feeling the strain. Rising costs for panels, memory, logistics, and tariffs complicate profitability, and the drop in the won-dollar exchange rate poses an additional threat to revenue. Even though a stronger won may lower raw material and some component procurement costs, it does not alleviate the challenges of slowing sales and promotional expenses.
Concerns about revenue contraction in the finished products (DX) division are expected to persist in the second half of the year due to the exchange rate decline. Improving the product mix is seen as crucial. The mobile division needs to expand sales of flagship and foldable models, while the TV and home appliance sectors must increase the share of premium products and AI-integrated appliances to improve performance.
Kim Dong-won, head of research at KB Securities, recently stated in a report, "The memory supply shortage is expected to worsen until 2028," and projected that memory prices will rise by at least 30% in the third quarter.
* This article has been translated by AI.
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