Samsung cuts production of memory chips after massive decline. It hasn’t been that bad for over a decade

Samsung preliminary estimates of its financial results in the first quarter of this year. (January – March 2023). To say they are pessimistic is an understatement. The company’s operating profit in this period amounted to 600 billion won (approx. PLN 1.93 billion), which means a huge decrease by approx. 96 percent. compared to the same quarter of 2022 (from 14 trillion won then).

Samsung records huge declines and cuts the production of memory chips

If the estimates are confirmed, it will be Samsung’s worst operating profit in more than a decade, and more specifically since the financial crisis of 2009. Other results are also not optimistic. Compared to the previous quarter (October – December 2022), operating profit also fell sharply (from 4.31 trillion won then). Sales also soared to 63 trillion won, up 10% from the previous year. less than in the last quarter and by 20 percent. less than in the first quarter of the previous year. Pessimistic forecasts made Samsung about a “significant” reduction in the production of memory chips, i.e. components, of which it has been the largest producer in the world for years. This includes both RAM chips and non-volatile flash memory (for computers and smartphones). Particular cuts are to be made to the production of memory types for which supplies have already been secured. As the Koreans explain, this decision is a response to the low demand for memory that has been recorded recently.

This state of affairs is one of the many effects of the huge production crisis caused by the coronavirus pandemic. Until recently, the demand for electronic components (including memory chips) was huge and exceeded supply. However, after the restrictions were lifted, consumers stopped buying computers, tablets and smartphones (mainly for remote work and study), which made the market unexpectedly saturated. In such a situation, manufacturers prefer to focus on using the memory chips that have already been ordered, rather than buying more batches of products.