Samsung to reduce chip production after its profit dropped to lowest

Samsung Electronics said it would trim down the volume of its production for memory chips. The decision came after the company recently posted its lowest earnings in 14 years.

Samsung Electronics expects that this move of cutting its chip production will help it recover its earnings fast. Local securities analysts predicted that the electronics and tech company could experience a steady recovery of its profits starting in the second half of this year onwards.

The experts provided this optimistic outlook as they also see the reduction of chip production as one way of regaining back the healthier earning rates. They also described Samsung Electronics’ decision regarding the memory chips as being carried out at the "meaningful level."

As per The Korea Times, the South Korean electronics giant saw that its quarterly operating profit has fallen by 96%, and with this result, it immediately made the decision to lessen its chip fabrication.

The company stated that its sales fell sharply because of the slow global economy, plus there was lower demand after the period of the COVID-19 pandemic. Samsung shared that its records showed its operating profits plummeted by KRW600 billion or £366 million from January to March. In the previous year, the record was KRW14 trillion.

"We are lowering the production of memory chips, especially that of products with supply secured," Samsung said.

Roh Geun Chang, a securities analyst at Hyundai Motor, commented about the lower profits result, "Samsung's recent decision will contribute to an earlier recovery in the memory chip sector. We had initially expected the DRAM fixed price to start rising from the fourth quarter, but the price will begin to go up from the third quarter."

Meanwhile, this is said to be the first time that Samsung Electronics’ operating profit has plunged below KRW1 trillion since the global financial crisis.

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