New Delhi (India), 7th April 2023: As a severe downturn in the global semiconductor business intensifies, Samsung Electronics Co. Ltd. announced on Friday that it would make a “meaningful” reduction in chip production after reporting a worse-than-anticipated 96% drop in quarterly operating profit.
The world’s largest memory chipmaker, which had defied the industry’s general trend of sharp investment cuts, made the unusual disclosure of a drop in output, underscoring the severity of the present market downturn while also raising expectations for a quicker market recovery.
Shares of rival SK Hynix Inc. rose 5% as investors bet that the move by the market leader would bolster chip prices, which had slumped by around 70% over the previous nine months. Shares of Samsung rose 4.5% in early trade, marking the greatest one-day gain since September.
According to Samsung, the sluggish global economy and customers’ halting purchases as they prioritised using up stocks were to blame for the steep decline in memory demand.
Samsun said, “We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured.”
The corporation, had earlier stated it would make minor modifications like pauses for upgrading manufacturing lines but not a full-blown cut. Therefore the announcement of the aggressive restructuring came as a surprise to many people.
