Samsung Electronics: increase in working capital

Samsung Electronics' working capital exceeded 80 trillion won. An excessive increase in working capital means that funds are tied up in accounts receivable and inventory, which can burden efficient operations.

Although purchase payables increased, the rise was less significant compared to the increase in trade receivables.

Accounts receivable are proportional to the increase in sales. However, in the first quarter, Samsung Electronics' accounts receivable increased more than its sales compared to the previous quarter. This appears to be due to strong sales of the Galaxy S24.

Expanding accounts receivable places a burden on cash flow. Samsung Electronics uses trade receivables as collateral to borrow money from banks. Collateralized borrowings increased significantly compared to the previous quarter.

The increase in inventory assets is attributed to the reversal of the reserve for inventory valuation losses, which was reflected last year, due to the rise in semiconductor prices, thereby increasing the book inventory value. As inventory assets increased significantly, working capital also saw a substantial rise. However, with memory semiconductor production focused on AI products, semiconductor inventories for servers, smartphones, and PCs are expected to decrease rapidly.