Although its operational profit is anticipated to decline by roughly 96% from the prior year in the first quarter of 2023. Samsung Electronics plans to reduce the production of memory chips. The South Korean IT behemoth will report its lowest earnings since Q1 2009.
The world’s largest memory chip manufacturer stated in its interim earnings announcement on Friday that its profit has been harmed by the global macroeconomic slowdown. An oversupply of memory chips, and weak demand.
Samsung is making adjustments to reduce memory manufacturing to a useful level, it said. To ensure a sufficient volume of memory chips for future demand, Samsung claims to optimise line operations. The tech business also said that in order to maintain its position as the industry leader in technology, it will continue to make investments in infrastructure and R&D.
According to projections, Samsung will report a quarterly profit of 600 billion won ($450 million) from January through March, down roughly 95.8% from 14.12 trillion won in Q1 2022. Although the company wouldn’t reveal its results until later this month, Bloomberg data indicates that analysts anticipated it to report a 1.4 trillion won quarterly profit for Q1. The company predicted that its first-quarter revenue would decrease from 77.78 trillion won to 63 trillion won.
Samsung announced earlier this year that it will not reduce its investment in memory chips. Despite declining demand in the hopes that the memory chip market would rebound in the second quarter of this year. In order to address the overstock, its competitors, including Micron Technology, Kioxia, and SK Hynix, have reduced their memory chip output.
In the third quarter of 2022, Samsung had the greatest global market share, accounting for 40.7% of DRAM memory chips and 31.4% of NAND flash memory, respectively. According to a recent TrendFroce research, the cost of DRAM and NAND decreased by about 20% and 15%, respectively, in the first quarter of this year.
A significant move in line with the government’s ambitious plan to establish a mega semiconductor hub in Yongin, on the outskirts of Seoul. Samsung announced last month that it would spend about $230 billion (300 trillion won) on building five new memory. And foundry fabs in South Korea over the next two decades.
Towards the end of April, the company will release a complete financial statement that includes net profit and earnings by sector.
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