SEOUL -- Samsung Electronics' semiconductor business, the engine that has powered the company's high profitability, is coming under growing pressure.

Micron challenges Samsung's dominance in memory market

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2021-05-23 07:30:07

SEOUL -- Samsung Electronics' semiconductor business, the engine that has powered the company's high profitability, is coming under growing pressure. In the latest fiscal quarter, the company was overtaken by rival Micron Technology in terms of operating profit margin for the sector, with the former posting 18% and the latter reaching 20%. A drop in the profitability of the company's cash cow could also affect its investment capacity in other sectors, such as semiconductor contract manufacturing and displays.

The decline in the semiconductor operation's profitability in the period from January to March stems largely from a plant shutdown in Texas after cold weather caused power outages in mid-February, and the opportunity loss during this period led to a drop in earnings.

But factory shutdowns are not the only reason for the drop in profits. The competitiveness of the company's semiconductor memory unit, which boasts sales of about $49 billion and a 40% share of the global market, is slowly declining.