Samsung profit dips 96%, slashes output of memory chips

Seoul, April 7

Samsung Electronics said on Friday it’s cutting the production of its computer memory chips in an apparent effort to reduce inventory as it forecast another quarter of sluggish profit.

Optimising operations

• The company predicted an operating profit of 600 billion won ($455 million) for the three months through March, which would be a 96% decline from the same period a year earlier
• It said it sales during the quarter likely fell 19% to 63 trillion won ($47.7 billion)

The South Korean technology giant in a regulatory filing said it has been reducing the production of certain memory products by unspecified “meaningful levels” to optimise its manufacturing operations, adding it has sufficient supplies of those chips to meet demand fluctuations.

The company predicted an operating profit of 600 billion won ($455 million) for the three months through March, which would be a 96% decline from the same period a year earlier. It said it sales during the quarter likely fell 19% to 63 trillion won ($47.7 billion).

Samsung, which will release its finalised first quarter earnings later this month, said the demand for its memory chips declined as a weak global economy depressed consumer spending on technology products and forced business clients to adjust their inventories to nurse worsening finances.

Samsung had reported a near 70% drop in profit for October-December quarter, which partially reflected how global events like Russia’s war on Ukraine and high inflation have rattled technology markets.

SK Hynix, another major South Korean semiconductor producer, said this week it sold $1.7 billion of bonds that can be exchanged into the company’s shares to help fund its purchases of chip-making materials as it weathers the industry’s downswing. SK Hynix had reported an operating loss of 1.7 trillion won ($1.28 billion) for the October-December period, which marked its first quarterly deficit since 2012.

“While we have lowered our short-term production plans, we expect solid demand for the mid-to-long-term, so we will continue to invest in infrastructure to secure essential levels in clean room capacities and expand investment in research and development to strengthen our technology leadership,” Samsung said. — AP