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Samsung attributed its low performance to the sliding demands from consumers that have a largely limited supply of its advanced chip technology.
South Korean multinational technology giant Samsung Electronics Co Ltd (KRX: 005930) has revealed its plans to cut its chip production after reporting one of the worst quarters in more than a decade. According to the release on Friday, the company posted a total of 63 trillion won in revenue and 600 billion won in operating profit for the first quarter of 2023.
This revenue plunged by 19% from the same level in the first quarter of last year while the operating profit slumped by about 97% from the year-ago period. The operating profit from the company comes as a figure that it had not recorded since the turn of the global financial crisis of 2008 which stirred a very woeful showoff in the first quarter of 2009.
Tech giants around the world have been battling inconsistency in their performances over the past year. Unlike outfits within the energy industry that recorded impressive multi-decade earning blowups over the past year, chip makers like Samsung have been highly hit by the war in Ukraine that has lasted well over a year now.
Samsung also attributed its low performance to the sliding demands from consumers that have a largely limited supply of its advanced chip technology. As it stands, Samsung has revealed its plans to cut the production of the chip in order to cushion additional losses.
“Samsung is adjusting to lower its memory production to a meaningful level,” the company said highlighting the strategies it hopes to adopt to achieve maximal productivity.
The hit on Samsung is not a lone event but an encompassing one. In earlier reports, other top chip producers including Micron Technology Inc (NASDAQ: MU), Kioxia, and SK Hynix Inc (KRX: 000660) all of which have also taken significant cuts in their overall growth outlook.
Samsung Retracing Its Plans for Chip Production
Over the past couple of quarters, the signs that the chip industry is under duress were evident and while most players in the industry already devised a plan to cut back on the accruing losses at the time, Samsung was projecting a dramatic turnaround and continued injection of cash into Research and Development.
As reported by Coinspeaker at the time, the rationale for the company was hinged on its plans to take over a large part of the market share emanating from the cutback from its rivals. The exact opposite might be what is happening with the latest push by the Korean giant to cut back on its models as a whole.
The launch of the latest high-end Samsung S23 series helped rescue the company from major losses in the quarter as sales for this phone skyrocketed all through the quarter.
While it devises its next move, the company is enjoying additional market dominance for DRAM Chips and NAND Flash memories by 40.7% and 31.4% respectively.