Seoul, Apr. 7 (BNA) Samsung Electronics Co. said Friday that it has cut memory production in the short term, as its quarterly profit fell sharply amid the chip slump, in a sharp departure from its previous position that it would not artificially reduce. production.
The world’s largest memory chip and smartphone maker earlier in the day estimated operating profit for the January-March period at 600 billion won (454.9 million U.S. dollars), down sharply from 14.12 trillion won last year.
Samsung blamed slowing demand for tech devices, along with adjusting customer inventory, on the poor performance, Yonhap reports.
Samsung’s first-quarter sales likely fell 19% to 63 trillion won from 77.78 trillion won a year earlier. Net profit data was not available.
Operating profit was 16.7 percent lower than average estimates, according to a survey by Yonhap News Agency’s financial data company, Yonhapax.
Samsung’s Hardware Solutions (DS) division, which oversees the chip business, is expected to post a deficit of about 4 trillion won, its first financial loss in 14 years, analysts estimated, as surplus chip stocks grow exponentially. Amid diminishing global demand.
The last time Samsung saw its core unit trading in deficit was the first quarter of 2009, when the world was emerging from the 2008 financial crisis.
The world’s largest manufacturer of memory chips expected the global chip market to shrink by 6% year-on-year to $563 billion this year, due to a sharp decline in demand, and warned of continued difficult conditions throughout the year.
Analyst Kim Dong-won of KB Securities predicted that oversupply problems would begin to resolve within a few months, and that DRAM and NAND flash prices would begin to recover in the second half after bottoming out in the second quarter.
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