Hyundai Mobis reported bearing an additional cost burden exceeding 60 billion won in Q2 due to memory semiconductor prices rising faster than anticipated. CFO Kim Do-hyung stated during the Q2 earnings conference call held on the 24th that approximately 61.5 billion won in memory semiconductor price increases were reflected in Q2 results. The company explained that explosive semiconductor price growth is creating strong cost pressure across the entire supply chain, with price negotiations currently impossible.
Hyundai Mobis Records 906.3 Billion Won Q2 Operating Profit
Hyundai Mobis recorded 906.3 billion won in operating profit for Q2, achieving a 6% operating profit margin driven by strong performance in its after-sales (A/S) division. However, the parts manufacturing division generated only 21.8 billion won in operating profit. This figure reflects both a 24 billion won operating loss from an India factory fire and the impact of surging memory semiconductor prices.
Supply Chain Faces Broad Price Pressure from Semiconductor Surge
Hyundai Mobis expressed concern that memory semiconductor price increases are creating cost pressure across the entire supply chain. CFO Kim stated, "What we're most worried about is that memory semiconductor price increases are having a strong price increase impact not only on non-memory semiconductors but across the entire supply chain including PCB components." He noted that price increases far exceeded what was anticipated when planning this year's business operations, particularly mentioning the surge in PCB components. Kim emphasized, "For both memory and PCB components, we are not in a position to negotiate prices. We are prioritizing securing maximum supply quantities to meet delivery dates in order to keep promises to customers."
Company Expands Long-Term Contracts to Secure Supply Stability
The company is responding by expanding long-term contracts in preparation for a prolonged cycle of price increases. CFO Kim stated, "Because trust has been built as a large purchaser, we can conclude long-term supply contracts at reasonable levels, and this can be an opportunity to further demonstrate Hyundai Mobis' value and supply chain stability itself." He emphasized that the company is "forming company-wide crisis response measures and establishing cost reduction plans," including sharing cost increases from semiconductor price surges with customers and implementing internal cost-cutting measures.
Middle East Conflict Impact Offset by A/S Division Performance
The company assessed that it is relatively managing cost pressures from the Middle East war situation. CFO Kim explained, "Although there is significant freight cost increase pressure, it doesn't seem like all costs will come as additional burdens," adding that "profitability from A/S seems to be more than enough to offset it."
FAQ
How much additional cost did Hyundai Mobis bear from semiconductor price increases in Q2?
Hyundai Mobis bore approximately 61.5 billion won in additional costs during Q2 due to memory semiconductor price increases, as stated by CFO Kim Do-hyung during the earnings conference call held on the 24th.
Why can't Hyundai Mobis negotiate semiconductor prices with suppliers?
CFO Kim stated that for both memory semiconductors and PCB components, the company is not in a position to negotiate prices. The company prioritizes securing maximum supply quantities to meet delivery dates and keep promises to customers, focusing on supply stability rather than price negotiations.
