Samsung has announced intentions to reduce chip output in response to a dramatic global decline in semiconductor demand, which has resulted in falling pricing.
The action occurred after the business reported a 96% drop in first-quarter earnings, which was worse than predicted. According to expert estimates, Samsung’s semiconductor division would register a record loss of 2.1 trillion won ($1.6 billion) in the current quarter, followed by another 2 trillion won loss in the next quarter. The stock rose 4.5% in early trade, the most in a single day since September.
Samsung’s output cut, with no previous announcement, followed the lead of smaller rivals such as SK Hynix Inc. and Micron, which had previously announced production cuts. Samsung’s move is expected to improve its performance slightly in the current quarter and could also cement or hasten the rebound of memory chip prices.
Smartphone and personal computer makers had stocked up on chips during the pandemic when demand for consumer devices surged, but they are now running down inventories as shoppers cut back on purchases amid rising inflation. Samsung said memory demand had dropped sharply because of a weak global economy and customers slowing purchases as they focused on using up their stocks.
Samsung did not disclose the size of the planned production cut but said it would make long-term investments in infrastructure and research to secure needed clean rooms for chip production and expand its technological lead. It did not say how its 2023 investment plans would be affected, having previously flagged capital spending similar to the 53.1 trillion won investment in 2022.
The sources for this piece include an article in Reuters.
