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    Samsung to continue production cuts to narrow chip losses

    Business
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    Last updated: October 2nd, 2023 at 10:11 UTC+02:00

    According to the latest report, Samsung is all set to continue with its production cuts to narrow down chip losses in Q3 2023. The world's largest chip maker started slashing its chip production earlier this year in the same move as its peers, SK Hynix Inc. and Micron Technology, to overcome the supply shortage.

    Analyst Kim Dong-won at KB Securities forecasted that Samsung's Device Solutions (DS) division, which oversees the company's cash-cow chip business, will make losses of around KRW 4 trillion (roughly $2.96 billion) in Q3, which is lower than KRW 4.35 trillion in Q2 2023. Kim also noted that Samsung has increased chip production cuts since the second half to 30% for DRAM and 40% for NAND Flash, up from 20% and 30%, respectively, in Q1 2023.

    Samsung's DS division reported an operating loss of KRW 4.6 trillion in Q1, which was its first financial loss in 14 years. The main reason for this was the significant chip inventories amid lower global demands. Prior to this, the company recorded a loss in Q1 2009. Greg Roh, head of research at Hyundai Motor Securities, noted that Samsung's production cut has had minimal impact so far, and all the profits were eaten away by the setting up of a new chip production line in its Pyeongtaek Campus.

    Trendforce (via Yonhap News Agency) noted that Samsung took an important step to cut down 50% of production for NAND Flash to deal with the ongoing lackluster demand. This is likely to set off a ripple effect, a potential price uplift for their primary products, Trendforce added.

    Business DRAMMicronNANDSamsung ElectronicssemiconductorSK Hynix Buy now!

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