Samsung attributed its poor performance to declining demand from consumers who have a very limited supply of its advanced chip technology.
South Korean multinational tech giant Samsung Electronics Co Ltd (KRX: 005930) has revealed plans to cut its chip production after reporting one of the worst quarters in more than a decade. According As of Friday’s launch, the company posted a total of 63 trillion won in revenue and 600 billion won in operating profit for the first quarter of 2023.
These revenues plunged 19% from the same level in the first quarter of last year, while operating profit plunged about 97% from the same period last year. The company’s operating profit comes as a figure it hasn’t recorded since the start of the global financial crisis of 2008, which led to much lamentable boasting in the first quarter of 2009.
Tech giants around the world have been battling inconsistency in their performances over the past year. Unlike teams within the energy industry that posted impressive multi-decade profit gains over the past year, chipmakers like Samsung have been hit hard by the war in Ukraine that has lasted for more than a year.
Samsung also attributed its poor performance to declining demand from consumers who have very limited supplies of its advanced chip technology. As it stands, Samsung has revealed its plans to cut production of the chip to cushion further losses.
“Samsung is adjusting to reduce its memory production to a significant level,” the company said, outlining the strategies it hopes to adopt to achieve maximum productivity.
The hit to Samsung is not an isolated event but an all-encompassing one. In previous reports, other major chip makers including Micron Technology Inc (NASDAQ: MU), Kioxia and SK Hynix Inc (KRX: 000660), all of which have also made significant cuts to their overall growth outlook.
Samsung revisits its plans for chip production
Over the past two quarters, signs that the chip industry is under pressure have been evident, and while most industry players have already devised a plan to cut accumulated losses at the time, Samsung was projecting a sea change. and a continuous injection of cash into Research and Development.
As Coinspeaker reported at the time, the company’s raison d’être was based on its plans to grab a large chunk of the market share that emanated from cutting rivals. The exact opposite could be what is happening with the Korean giant’s latest push to scale back its models as a whole.
The launch of the latest high-end Samsung S23 series helped rescue the company from heavy losses in the quarter as sales of this phone soared throughout the quarter.
As it charts its next move, the company enjoys additional dominance of the DRAM chip and NAND Flash memory market at 40.7% and 31.4%, respectively.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about the real-life applications of blockchain technology and innovations to drive mainstream acceptance and global integration of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based sites and media. Benjamin Godfrey is a lover of sports and agriculture.
