South Korea’s Samsung Electronics’ operating profit fell 96 percent to 600 billion won (CZK 9.8 billion) in the first quarter, hitting a 14-year low. The company estimated this in its preliminary results, the drop in profit resulted from the decline in the global semiconductor market. Samsung has therefore announced that it will significantly reduce chip production, Reuters reported today.
Lowest sicne 2009
Refinitiv SmartEstimate had previously estimated that Samsung would report an operating profit of 873 billion won. Quarterly operating profit was the lowest since the first quarter of 2009, when it was 590 billion won. Sales for this year’s first quarter are likely to have fallen 19 percent, Samsung said.
“Demand for memory chips has declined sharply due to the macroeconomic situation and a decline in demand,” the company said. “We are significantly reducing the production of memory chips,” she added. However, it did not specify the extent of the reduction.
Inflation and others issues
As consumer demand for technology devices is weak due to rising inflation, semiconductor buyers, including data center operators and smartphone and PC makers, are abandoning new chip purchases and consuming inventories.
Analysts estimate that the chip division suffered a quarterly loss of over four trillion won. In fact, memory chip prices have fallen and the value of its inventory has declined. This would be the chip division’s first quarterly loss since the first quarter of 2009. The division generates about half of Samsung’s profits in better years.
The company will publish detailed results, including the breakdown into individual divisions, later this month.
source: ÄŒTK
