Samsung to Cut Down Memory Chip Production

Samsung Electronics will cut memory chip production after estimating a 96% drop in its quarterly operating profit.

The chip-making giant said sales had dropped sharply due to a slow global economy and less demand after Covid.

Samsung said preliminary numbers showed operating profits fell 600 billion won (£366m) in January-March, from 14 trillion won the previous year.

The firm’s shares rose more than 4% despite the decision to slow chip-making.

“We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured,” the South Korean tech giant said.

Demand for memory chips ramped up during Covid-induced lockdowns as consumers bought new electronics to use at home.

The industry is now recovering from a chip shortage over the past couple of years, but many semiconductor manufacturers are struggling to find a balance between their inventories and current demand.

Samsung, the world’s biggest maker of televisions, tablets and smartphones, had resisted the move to cut memory chip production compared to its competitors.

Investors are hopeful that Samsung’s announcement is a sign of a market recovery in the semiconductor industry.

The company is scheduled to release detailed earnings later this month.