Samsung to chop chip manufacturing after 14-year low revenue By Reuters

© Reuters. FILE PHOTO: Visitors passes a Samsung Electronics Co digital billboard within the Occasions Sq. space of Manhattan in New York Metropolis, U.S. March 2, 2023. REUTERS/Chris Helgren

By Joyce Lee and Heekyong Yang

SEOUL (Reuters) -Samsung Electronics Co Ltd mentioned on Friday it will make a “significant” lower to chip manufacturing after flagging a worse-than-expected 96% plunge in quarterly working revenue, as a pointy downturn within the world semiconductor market worsens.

Shares on the earth’s largest reminiscence chip and TV maker rose 3% in early buying and selling, whereas rival SK Hynix Inc’s shares surged 5% as traders welcomed plans to chop manufacturing to assist protect pricing energy.

Samsung (KS:) estimated its working revenue fell to 600 billion received ($455.5 million) in January-March, from 14.12 trillion received a yr earlier, in a brief preliminary earnings assertion. It was the bottom revenue for any quarter in 14 years.

“Reminiscence demand dropped sharply… because of the macroeconomic state of affairs and slowing buyer buying sentiment, as many purchasers proceed to regulate their inventories for monetary functions,” the corporate mentioned in a press release.

“We’re reducing the manufacturing of reminiscence chips by a significant stage, particularly that of merchandise with provide secured,” it added, in a reference to these with enough inventories.

The manufacturing lower sign is unusually robust for Samsung, which beforehand mentioned it will make small changes like pauses for refurbishing manufacturing strains however not a full-blown lower.

It didn’t disclose the scale of the deliberate lower.

The primary-quarter revenue fell wanting a 873 billion received Refinitiv SmartEstimate, weighted towards analysts who’re extra constantly correct. A number of estimates had been revised down earlier this week.

It was the bottom since a 590 billion received revenue within the first quarter of 2009, in response to firm information.

With shopper demand for tech gadgets sluggish because of rising inflation, semiconductor patrons together with information centre operators and smartphone and private pc makers are refraining from new chip purchases and utilizing up inventories.

Analysts estimated the chip division sustained quarterly losses of greater than 4 trillion received ($3.03 billion) as reminiscence chip costs fell and its stock values had been slashed.

This might be the chip enterprise’ first quarterly loss for the reason that first quarter of 2009, a significant divergence for what is generally a money cow that generates about half of Samsung’s income in higher years.

Income probably fell 19% from the identical interval a yr earlier to 63 trillion received, Samsung mentioned.

The corporate is because of launch detailed earnings, together with divisional breakdowns, later this month.

($1 = 1,317.2300 received)

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