Won Falls 10% in Two Months, Wiping 21 Trillion Won From Samsung and SK hynix Operating Profit Forecasts

[Financial News] A stronger won has emerged as a new headwind for Samsung Electronics and SK hynix, which are riding an AI-driven memory supercycle. Despite rising memory prices and growing demand for high-bandwidth memory (HBM), the won-dollar exchange rate has fallen by more than 10% in just two months, lowering the two companies’ annual operating profit forecasts by more than 20 trillion won.
According to industry sources on the 13th, the won-dollar exchange rate stood at 1,345.9 won at the close of weekly trading on the 11th. Compared with 1,501.4 won on July 10, it had fallen 10.4% in just two months.
As the exchange rate has reversed direction, expectations for the semiconductor industry’s earnings have also declined. Yonhap Infomax’s one-month average consensus compiled as of July 10 put this year’s operating profit forecasts for Samsung Electronics and SK hynix at 384 trillion won and 277 trillion won, respectively. Their combined operating profit forecast reached 661 trillion won.
However, as of the 11th, the forecasts had fallen to 377 trillion won for Samsung Electronics and 263 trillion won for SK hynix. On a combined basis, the forecast dropped to 640 trillion won, wiping out 21 trillion won in just two months.
Expectations for third-quarter earnings have also been lowered. In July, third-quarter operating profit forecasts for Samsung Electronics and SK hynix stood at 115 trillion won and 84 trillion won, respectively, for a combined 199 trillion won. More recently, they fell to 111 trillion won and 77 trillion won, bringing the combined forecast down to 188 trillion won.
The prevailing analysis is that the sharp decline in the exchange rate, rather than a downturn in the memory market itself, is weighing on earnings. Semiconductor companies sell most of their products overseas and receive payment in dollars. When the won strengthens, their revenue and profit in won decline even if their dollar-denominated sales remain unchanged.
Samsung Electronics is particularly dependent on exports. Of its 258.6 trillion won in separate-basis revenue in the first half of this year, 245.7 trillion won came from exports, accounting for more than 95%.
SK hynix is also highly exposed to exchange-rate movements. In its latest semiannual report, the company calculated that, assuming its foreign-currency assets and liabilities remained at their levels as of the end of June, a 10% decline in the won-dollar exchange rate would reduce profit before income tax expense by approximately 4.75 trillion won.
Securities analysts are also identifying the exchange rate as a key variable for second-half earnings. DB Securities expects Samsung Electronics’ third-quarter results to come in slightly below market expectations. It said that unfavorable exchange rates and weakness in the Samsung Electronics Mobile eXperience (MX) Business, which is expected to fall short of market expectations, would offset solid memory shipments and higher selling prices.
Samsung Electronics and SK hynix are also closely monitoring exchange-rate fluctuations and are reportedly reviewing their business plans for this year and next year, including domestic and overseas investments and spending.
However, the industry believes that this short-term exchange-rate factor is unlikely to derail the memory market’s structural growth.
TrendForce forecast that memory prices would continue to rise as suppliers’ inventories remain at historically low levels and shipment growth remains limited in the third quarter, following the second quarter. This suggests that memory manufacturers are likely to retain their pricing power for the time being because supply growth is failing to keep pace with demand.
Meanwhile, demand for HBM driven by the expansion of the AI market is also supporting growth. As global AI models become more advanced and Chinese companies compete to launch highly efficient AI models, demand for memory required for AI computing is expected to increase structurally.
[email protected] Lee Dong-hyuk Reporter