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 is expected to post 600 billion won ($450 million) in quarterly profit for the first quarter of 2022, down about 95.8% from 14.12 trillion won in the first quarter of 2022. . The company had expected him to book a quarterly profit of KRW 1.4 trillion in the first quarter. The company expects revenue in the first quarter to fall to KRW 63 trillion from KRW 77.78 trillion in the previous year.
Earlier this year, Samsung said it would not cut investment in memory chips despite declining demand, hoping the memory chip market would recover in the second quarter of this year. At the same time, peers such as Micron Technology, Kioxia and SK Hynix have cut production of memory chips to combat oversupply.
Samsung held the largest global market share in Q3 2022 for DRAM memory chips and NAND flash memory with 40.7% and 31.4% respectively. According to a recent report by TrendFroce,
Samsung 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. Yongin on the outskirts of Seoul.
The company plans to release full financial statements at the end of April, including net income and sector earnings.
