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Samsung to Stop Production of Memory Chips After 96 Percent Drop in Profit

By Aarti Dhapte , 04 May, 2023

The world's largest chip producer, Samsung Electronics, plans to cut memory chip production after estimating a 96 percent drop in its quarterly profit. According to the company, chip sales have dropped sharply because of the slow global economy and less demand after the pandemic.

According to the information given by Samsung, the preliminary numbers showed that operating profits fell 600 billion won, that is, £366 million and $455 million in January-March, from 14 trillion won in 2022. The firm's shares have also jumped more than 4 percent on the news of slow chip making.

As per the reports, the demands for memory chips have risen during the covid lockdowns as consumers used to buy new electronics to use at home. The company also added that they are lowering production of memory chips by a significant level.

The industry has been slowly recovering from the shortage of chips over the past couple of years. But the semiconductor manufacturers are finding it challenging to balance the inventories and current demands. One of the analysts’ reports that the market for end-product manufacturers slowed after the overall economy slowed down. Thus, the manufacturers stopped ordering chips. According to the information, Samsung resisted the move to cut memory chip production compared to its other market competitors. Now, investors are of hope that Samsung's announcement is a sign of a market recovery in the semiconductor industry.

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Aarti Dhapte

Team Lead - Research