South Korean tech giant to slash chip output amid economic downturn and falling sales
Samsung Electronics has revealed plans to significantly reduce its chip production following its weakest profit performance in almost 15 years.
On Friday, the South Korean technology powerhouse announced that its first-quarter operating profits are expected to plummet by over 96 percent due to a steep drop in global memory chip demand.
Between January and March, the company forecasts profits to fall to 600 billion won (approximately $455 million), marking its lowest quarterly earnings since 2009. In a regulatory statement, Samsung cited “persistently weak demand for IT products,” which has negatively impacted performance across all sectors of the business.
Although Samsung did not disclose exact figures for the production cut, it emphasized the reduction would be “meaningful.” The company stated, “We are decreasing memory chip output to a substantial degree, particularly for products where inventory levels are already high.”
This development underscores the challenges facing South Korean semiconductor giants like Samsung and SK Hynix, who had previously benefited from soaring chip demand and record-breaking profits.
The downturn is not new for Samsung, which reported a nearly 70 percent drop in profits during the fourth quarter of 2022. That decline was attributed to a mix of global factors including the war in Ukraine and elevated inflation levels.
Samsung Group remains the largest of South Korea’s powerful family-run conglomerates, known as chaebols, and contributes roughly 20 percent of the country’s total GDP.
