Samsung Electronics to cut chip output to ride out downturn
- The unusual output cut by the world’s biggest memory chip maker came after it flagged a worse-than-expected 96 per cent plunge in first-quarter profit
- Although cutting short-term production, Samsung said it was still making long-term investments in infrastructure and research
Samsung Electronics said on Friday it would make a “meaningful” cut to chip production, following the lead of smaller rivals, as it grapples with a sharp global downturn in semiconductor demand that has sent prices plummeting.
The unusual output cut by the world’s biggest memory chip maker – with no previous announcement recalled by Samsung officials and analysts – came after it flagged a worse-than-expected 96 per cent plunge in first-quarter profit.
Investors brushed off the profit miss, betting the move by the industry leader would support chip prices that had fallen by about 70 per cent over the last nine months.
Smartphone and personal computer makers had stocked up on chips during the pandemic when demand for consumer devices surged, but they are now running down inventories as shoppers cut back on purchases amid rising inflation.
Samsung said memory demand had dropped sharply because of a weak global economy and customers slowing purchases as they focused on using up their stocks.
