As memory chip sales declined to a worldwide slowdown, Samsung Electronics predicted that first-quarter operating earnings would decline by more than 95% year over year to a 14-year low.

Speaking in terms of the largest manufacturer of smartphones in the world, Samsung is the flagship company of the family-controlled conglomerate Samsung Group, which manages business in the fourth-largest economy in Asia.

The IT giant also said that it will meaningfully reduce memory chip production as a result of weak demand and a sharp decline in profits. The company predicted in a regulatory filing that operating earnings for the months of January through March would decline 95.7% to 600 billion won ($455 million), the lowest level since the first quarter of 2009. According to Samsung's announcement, the predicted decline in earnings was brought on by continuing weak demand for IT products that have affected the performances of all sectors. However, it stated that it will keep making investments in infrastructure and research and development in light of the long-term expected strong demand for memory chips.

In anticipation of future price increases, Samsung's shares increased more than 4% on Friday as a result of the move to reduce chip production. According to analyst Han Dong-hee of SK Securities, Samsung did flat in the statement "solid sales of the new Galaxy S23 series" from the smartphone company.

In recent years, Korean chipmakers led by Samsung have seen record profits as their product prices have risen, but the global economic recession has impacted memory sales. Samsung has continued to make risky investments despite the recent decline in profits. In March, the company announced plans to invest $227 billion over the next 20 years in the development of the biggest chip center in the world in Yongin, south of Seoul. The strategy is a part of the South Korean government's effort to make significant investments in six important technologies, including semiconductors, screens, and batteries, all of which are already well-established markets for the country's IT giants.

Samsung Expects 1st Quarter Profit to Plunge 95%

Comments

Most readed

Comments