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(Bloomberg) -- SK Hynix Inc. is considering cutting its 2023 capital expenditure by about a quarter to 16 trillion won ($12.2 billion) in response to slower electronics demand than anticipated, people familiar with the matter said.
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The world’s second largest memory maker is sticking largely with plans to spend about 21 trillion won this year building up DRAM and NAND capacity, the people said. But rising uncertainty over dwindling demand for the chips that go into everything from smartphones to servers has forced a rethink of expansions next year, they said, asking not to be identified talking about undisclosed plans.
The Apple Inc. supplier’s move comes as global tech companies sound the alarm over macroeconomic risks from rising interest rates, which is turning consumers off pricey gadgets. Hynix hasn’t made a final decision about capacity expansion plans, the people said.
The company’s shares rose 5% in Seoul on Friday, their biggest gain in four months, after investors bet Hynix’s cut would put a floor under chip prices by reducing an inventory glut. Samsung Electronics Co., the world’s biggest memory producer, was up 4.4%, its biggest single-day climb since December.
Fellow memory maker Micron Technology Inc. said at the start of this month that it plans to slow supply expansion next year and use existing inventory to fill part of the market demand. It expects capex to decline year-on-year. Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker, said on Thursday it could trim spending on expansion by as much as 9% this year from initial projections.
“We have not decided whether to change our capex plan for next year,” Hynix said in a statement.
Read more: TSMC Hikes Outlook Yet Delays Spending as Uncertainty Persists
Apple is TSMC’s biggest customer, accounting for an estimated quarter of its revenue. Chief Executive Officer C.C. Wei told analysts on a conference call he was unconcerned about potential inventory buildups of high-end smartphones. In April, the iPhone maker said it was grappling with supply-side constraints that could shave as much as $8 billion off revenue in the June quarter.
“We expect limited supply growth due to memory makers’ disciplined capacity addition, rising difficulties in memory fabrication, tech migration’s decelerating contribution to bit growth, and foresee supply-driven memory recovery throughout 2023E,” Citi analysts wrote in a report.