Samsung Electronics logs worst quarterly earnings in 14 years - CNA

The first-quarter drop is the third consecutive margin squeeze for Samsung, which saw a 70 per cent fall in operating profits in the fourth quarter on-year.

Samsung shares were down 0.3 per cent on Thursday morning.

SCALING BACK PRODUCTION

Korean chipmakers - led by Samsung - enjoyed record profits in recent years as prices for their products soared, but the global economic slowdown has dealt a blow to memory sales.

Demand swelled during the pandemic as consumers bought new computers and smartphones during lockdowns, prompting chip makers to ramp up production.

But demand quickly diminished as lockdowns lifted and weakened further in the face of soaring inflation and rising interest rates.

Samsung said this month it will scale back memory chip production to a "meaningful" level to address the oversupply, an unusual move by the firm, which previously said it would make only small adjustments.

South Korean chip maker SK Hynix and Micron Technology of the United States have also reduced production.

Samsung's "active" efforts to get out of the inventory rut were "positively evaluated" considering its effect on market sentiment and demand for memory chips, said a report released by Eugene Investment & Futures.

"Even if the pace of recovery for demand remains slow, the semiconductor industry is highly likely to recover in the second half if cooperation among the chip makers on production cuts goes well," it added.

While solid sales of its new flagship Galaxy 23 smartphones helped offset deficits in the chip sector in the first quarter, analysts expect conditions in the April to July period to worsen and even lead to Samsung's first profit loss since 2008.

The recent drop in profits has not deterred Samsung from making bold investments - in March, it unveiled plans to contribute US$227 billion over the next two decades to building the world's largest chip centre in Yongin, south of Seoul.

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