Samsung Electronics plans to reduce memory chip production as its operating profit in the first quarter of 2023 is expected to decline by about 96% year-on-year. This would be the lowest profit recorded by a South Korean tech giant since the first quarter of 2009.
The world’s largest memory chip maker said in its earnings call on Friday that a global macroeconomic slowdown, an oversupply of memory chips and weak demand were hurting its profits.
“Samsung is adjusting memory production to a meaningful level,” he said. Samsung claims to optimize its line operations to ensure that it has enough memory chips for future demand. Technology companies will continue to invest in infrastructure and research and development to strengthen their technological leadership in the industry, he added.
Samsung’s quarterly profit from January to March is expected to be KRW 600 billion ($450 million), down about 95.8% from KRW 14.12 trillion in the first quarter of 2022. The company expects him to book a quarterly profit of KRW 1.4 trillion in the first quarter. The company expects first-quarter revenue to fall to KRW 63 trillion from KRW 77.78 trillion in the same period last year.
Earlier this year, Samsung Said The company has no intention of cutting its investment in memory chips despite declining demand and hopes the memory chip market will recover later this year. At the same time, its peer, micron technology, Kioxiaand SK Hynixcut memory chip production to combat the oversupply.
Samsung had the largest market share in the world 40.7% and 31.4% DRAM memory chip and NAND flash memory prices fell 20% and 15% respectively in Q3 2022. Recent reports by TrendFroce.
Samsung Electronics announced last month that it will spend about $230 billion (300 trillion won) to build five new memory and foundry fabs in South Korea over the next 20 years. This is a major move in line with the government’s ambitious goal of establishing a mega-semiconductor hub. Yongin, a suburb of Seoul.
The company plans to release full financial statements later this month, including net income and sector earnings.
