According to foreign media reports, in the first quarter after the operating profit is expected to decline by more than 90% year-on-year, Samsung Electronics, which previously had no intention of artificially cutting production of memory chips, also finally decided to reduce production.
The latest reports show that after Samsung Electronics announced its decision to cut the production of memory chips, they have been pushing ahead with the production cuts and have been reducing investment in production equipment and adjusting capacity utilization since the announcement.
From the foreign media reports, it appears that Samsung Electronics announced its decision to reduce production on the same day that it gave its first-quarter earnings estimates on April 7, expecting operating profit to fall to about 600 billion won (currently about RMB 3.108 billion) in order to push the market to balance supply and demand.
However, at the time, foreign media also mentioned in their reports that Samsung Electronics had only cut production for a short period of time. In a statement to the foreign media, they then said that they had adjusted their short-term production plans, but as they expect demand to remain strong in the long term, they would also continue to invest in infrastructure, ensure the necessary clean rooms and expand investments in research and development to consolidate their technological leadership.
Samsung Electronics is the world’s largest memory chip manufacturer and their initiative to reduce production in a market where demand and prices are both declining due to oversupply is helping to balance market supply and demand as soon as possible and stabilise prices.
Against the backdrop of poor demand for memory chips and declining prices, Samsung Electronics’ storage business was also affected, with revenue falling to KRW 8.92 trillion (currently approximately RMB 46.206 billion) in the first quarter, down 56% year-on-year and 27% sequentially, and its Device Solutions division also turned from profit to loss in the first quarter, posting an operating loss of KRW4.58 trillion (currently approximately RMB 23.724 billion). The Equipment Solutions division also turned from profit to loss in the first quarter, posting an operating loss of 4.58 trillion won (currently approximately RMB 23.724 billion).