Samsung Electronics posts record chip losses as memory slump nears nadir

Samsung Electronics posted record quarterly losses in its chip division, demonstrating the broad fallout from a global downturn dogging the biggest technology firms.

The world’s most prolific smartphone and memory chip maker said on Thursday it saw demand for the storage components improving gradually, echoing sentiments SK Hynix executives expressed a day ago. Samsung expects a second-half recovery in smartphones and displays, driven by a Chinese recovery.

South Korea’s largest company reported net income of 1.4 trillion won (US$1.05 billion), compared with the 1.45 trillion won average analyst estimate. Its semiconductor division, typically its largest, posted a loss of 4.58 trillion won.

The loss punctuates concerns about a broad tech recession that has hit the world’s biggest names from Apple to Intel. Samsung, which supplies chips to Apple, while making the iPhone’s closest competitor, posted its slimmest operating profit since 2009 just a few weeks ago.

Samsung has been at the heart of a slump gripping the US$160 billion global memory industry, a proxy for a wider tech downturn that set in after a Covid-19-era boom in internet activity and device sales. Inflation and recession fears last year triggered a rapid pullback on consumer and business spending that has since hammered sales of electronics worldwide.

To reverse sliding chip prices, Samsung announced this month it was initiating a “meaningful” cut in semiconductor production. Despite that reduction, Samsung said on Thursday its investment in memory chips this year will be similar to last year’s because it is seeking to safeguard its longer-term competitiveness.

The unusual move, twinned with more upbeat predictions about personal computer and smartphone demand, spurred hopes that the industry will climb out of its trough this year. Spot memory prices rebounded for the first time in 13 months shortly after the announcement.