Samsung Electronics plans to cut production of memory chips as its operating profit in the first quarter of 2023 is expected to plunge 96% from a year earlier. This will be the lowest profit posted by the South Korean tech giant since the first quarter of 2009.
The global macroeconomic slowdown, an oversupply of memory chips and weak demand have hurt its earnings, the world's largest memory chipmaker said in its preliminary earnings release.
"Samsung is adjusting to reduce its memory production to a significant level," he said. Samsung claims to optimize operations to ensure sufficient volume of memory chips for future demand. The technology company added that it will continue to invest in infrastructure and research and development to strengthen its technological leadership in the industry.
Samsung's quarterly profit for January to March is projected to hit 600.000 billion won ($450 million), a drop of about 95,8% from 14,12 trillion won in the first quarter of 2022. While the company will publish its results at the end of this month, data compiled by Bloomberg suggests that analysts were expecting the company to post a quarterly profit of 1,4 trillion won for the first quarter. Its revenue is also expected to fall to 63 trillion won in the first quarter from 77,78 trillion won a year earlier, the company said.
Earlier this year, Samsung said that it would not cut its investment in memory chips despite declining demand, hoping to recapture the memory chip market in the second of this year. At the same time, the pairs of him, like Micron, kioxia y SK Hynixthey have reduced their production of memory chips to counter the oversupply.
Samsung had the largest global market share with the 40,7% y 31,4% in DRAM and NAND flash memory chips, respectively, in the third quarter of 2022. The price of DRAM and NAND fell by around 20% and 15% in the first quarter of this year, according to a recent report by TrendFroce.
Samsung said last month it would spend about $230 billion (300 trillion won) building five new memory and foundry factories in South Korea over the next two decades, a big move in line with the government's ambitious target. to establish a mega semiconductor center in South Korea, in Yongin, on the outskirts of Seoul.
The company will release a full financial statement later this month, which will include net income and earnings by sector.
