Samsung to cut Memory Chip Production due to messed up quarterly profit

A few days ago, the South Korean firm Samsung shared information regarding their Quarter 1st’s operating profit. Unfortunately, the company didn’t perform well this time and saw a 92% YoY fall in quarter 1st’sprofit. After the year 2009, it was the first time in these 14 years that Samsung get to experienced this colossal earning shock. 

Notably, Samsung’s 1Q23 operating profit dropped by 95.2% as compared to 1Q22. In the first quarter, they gained an operating profit of 600 billion won (US$454 million) over sales of 63 trillion won (US$48 billion). It shows that Samsung’s sales have dropped by 10.6%, followed by a drop of 86.1% in operating profit. 

However, Samsung didn’t share info regarding the business segment, but it seems they have seen a loss of 3-4 trillion won. Notably, this huge loss is due to the continuously weakening memory semiconductor prices. On top of that, semiconductor and display e arnings declined, and IT product demand is also not growing.

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By looking at all of these circumstances, the Korean company has decided to cut its semiconductor production. They have also made a statement in that manner, “Although we have revised our short-term production plan to make a cut in production, we expect solid demand in the mid-to-long-term.”

The company has taken this step because it believes that it will surely improve the memory supply-demand situation and stabilize the demand. As a result of this memory chip production cut, Samsung’s stock price closed at 65,000 won (US$49.17), which in particular rose by 4.33% as compared to the previous day. 

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Global Times (GT), a Chinese state-run English-language newspaper, has said in that manner, “The global semiconductor industry would not be facing such uncertainties if the United States had not pushed for decoupling from China to curb China’s rise in the semiconductor industry.”

However, let us tell you this report is based on Samsung’s initial sales and profit figures because the final earnings report is still hasn’t unveiled. It is possible that the Korean company will announce its final earnings, including the business segments’ results, in April. Afterwards, we sure will get some additional info regarding it.