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Samsung Records Worst Profit Since 2009, Set to Cut Chip Production

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Samsung attributed its lower performance to dangling demands from consumers who have a largely limited supply of advanced chip technology.

South Korean tech giant Samsung Electronics Co Ltd (KRX: 005930) has revealed its plans to cut chip production after reporting one of the worst quarters in more than a decade. according To Friday’s release, the company reported a total of 63 trillion won in revenue and 600 billion won in operating profit for the first quarter of 2023.

These revenues decreased by 19% from the same level in the first quarter of last year, while operating profits fell by about 97% from the same period last year. The operating profit comes from the company as a number it has not recorded since the start of the global financial crisis of 2008, which sparked a very bad showing in the first quarter of 2009.

Tech giants around the world have suffered inconsistent performance over the past year. In contrast to the energy industry’s apparel, which has posted huge earnings ripples over the past year, chipmakers like Samsung have been hit hard by the war in Ukraine that has dragged on for more than a year now.

Samsung also attributed its lower performance to lower demands from consumers who have a largely limited supply of advanced chip technology. As it is, Samsung revealed its plans to cut production of the chip in order to mitigate additional losses.

“Samsung is adapting to reduce its memory throughput to a meaningful level,” the company said, referring to strategies it hopes to adopt to maximize throughput.

Samsung’s success is not an isolated event but an all-encompassing one. In earlier reports, other major chip producers including Micron Technology Inc (NASDAQ: MU), Kioxia and SK Hynix Inc (KRX: 000660) made significant cuts in their overall growth forecasts.

Samsung is retracing its chip production plans

Over the past couple of quarters, the signs that the chip industry was under pressure were evident, and while most players in the industry had already put in place a plan to cut losses accumulated at that time, Samsung was expecting a radical turnaround and continued injection of cash into R&D.

As Coinspeaker reported at the time, the company’s rationale hinged on its plans to capture a significant portion of the market share generated by the cuts from its competitors. Quite the opposite may be what is happening with the latest push by the Korean giant to downsize its models as a whole.

The launch of the latest high-end Samsung S23 series helped save the company from significant losses in the quarter as sales of this phone were up throughout the quarter.

As it lays out its next move, the company has additional market dominance for DRAM chips and NAND Flash memory at 40.7% and 31.4%, respectively.

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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about real-world applications of blockchain technology and innovations to drive public acceptance and global integration of the emerging technology. His desires to educate people about cryptocurrencies have inspired his contributions to popular blockchain-based media and websites. Benjamin Godfrey is a fan of sports and farming.

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