Samsung to Cut Chip Production After 14-year Low Profit

Samsung Electronics Co Ltd stated on Friday it could make a “meaningful” minimize to chip manufacturing after flagging a worse-than-expected 96% plunge in quarterly working revenue, as a pointy downturn within the world semiconductor market worsens.

Shares on this planet’s largest reminiscence chip and TV maker rose 3% in early buying and selling, whereas rival SK Hynix Inc’s shares surged 5% as traders welcomed plans to chop manufacturing to assist protect pricing energy.

Samsung estimated its working revenue fell to 600 billion gained ($455.5 million) in January-March, from 14.12 trillion gained a 12 months earlier, in a brief preliminary earnings assertion. It was the bottom revenue for any quarter in 14 years.

“Memory demand dropped sharply… due to the macroeconomic situation and slowing customer purchasing sentiment, as many customers continue to adjust their inventories for financial purposes,” the corporate stated in a press release.

“We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured,” it added, in a reference to these with enough inventories.

The manufacturing minimize sign is unusually robust for Samsung, which beforehand stated it could make small changes like pauses for refurbishing manufacturing traces however not a full-blown minimize.

It didn’t disclose the scale of the deliberate minimize.

The first-quarter revenue fell wanting a 873 billion gained Refinitiv SmartEstimate, weighted towards analysts who’re extra constantly correct. Multiple estimates had been revised down earlier this week.

It was the bottom since a 590 billion gained revenue within the first quarter of 2009, in accordance with firm knowledge.

With shopper demand for tech units sluggish as a result of rising inflation, semiconductor patrons together with knowledge centre operators and smartphone and private pc makers are refraining from new chip purchases and utilizing up inventories.

Analysts estimated the chip division sustained quarterly losses of greater than 4 trillion gained ($3.03 billion) as reminiscence chip costs fell and its stock values had been slashed.

This can be the chip enterprise’ first quarterly loss because the first quarter of 2009, a significant divergence for what is generally a money cow that generates about half of Samsung’s income in higher years.

Revenue doubtless fell 19% from the identical interval a 12 months earlier to 63 trillion gained, Samsung stated.

The firm is because of launch detailed earnings, together with divisional breakdowns, later this month.

($1 = 1,317.2300 gained)

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(This story has been edited by News18 employees and is printed from a syndicated news company feed)