Samsung Electronics might be hitting the panic button right now, as it has announced that it will be making a ‘meaning’ cut to its chip production. This comes after the Korean giant suffered a massive drop in sales, with a 96% drop in profits during the first quarter of this year marking a downturn in the global semiconductor market.
In a preliminary earnings statement, Samsung notes that its operating profit during the January 2023 to March 2023 timeframe is down to just 600 billion Korean won (RM2 billion). It’s a sharp contrast from the 14.12 trillion Korean won it earned during the same period last year, with this year’s first quarter also being Samsung’s lowest profit for any quarter in the last 14 years.
According to Samsung, they’re seeing a huge drop in demand for memory as due to global economic conditions and slowing customer purchasing sentiment, customers are readjusting their spending habits. As such, they’re lowering production of memory chips by a ‘meaningful level’, in particular products with sufficient inventory already. Samsung did not however specify just how big the cut in production is.
Samsung isn’t the only major memory chip manufacturer that has announced production cuts either. Fellow South Korean company SK Hynix and their US counterpart Micron have already announced similar cuts in production too. The former had also already revealed that for 2023 they are planning to spend just half of their budget from last year, while the latter had cut a third off its investment plans a few months back.
While they’re cutting down on chip production, Samsung won’t cheap out in their long-term investments though. They say that it would continue to invest in research and development along with infrastructure, but stopped short of confirming that they will stick to their investment plans for the year.
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