Samsung To Make 'Meaningful' Cut To Chip Production As Profit Falls To Lowest In 14 Years

Amid falling global semiconductor sales, Samsung Electronics on Friday said it would make a 'meaningful' cut to chipset production.

The South Korean tech giant also estimated its operating profit fell to 600 billion won.

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Amid falling global semiconductor sales, Samsung Electronics on Friday said it would make a 'meaningful' cut to chipset production, says a report by news agency Reuters. Samsung has also flagged a worse-than-expected 96 per cent decline in quarterly operating profit. It should be noted that the chip production cut signal is unusually strong for Samsung, which had earlier said it would only make small adjustments to refurbishing production lines, but not a full-blown cut.

The South Korean tech giant also estimated its operating profit fell to 600 billion won (roughly $455.5 million) in January-March, from 14.12 trillion won a year earlier, in a short preliminary earnings statement. It was the lowest profit the company has registered for any quarter in 14 years.

“Memory demand dropped sharply … due to the macroeconomic situation and slowing customer purchasing sentiment, as many customers continue to adjust their inventories for financial purposes,” the company was quoted as saying by Reuters.

“We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured,” it added, in a reference to those with sufficient inventories.

The industry is now recovering from a global chipset crisis that came after Covid-19, but many semiconductor manufacturers are struggling to find a balance between their inventories and current demand, reports say.

Meanwhile, Samsung may ditch Qualcomm Snapdragon chipsets for the S23 FE model that is expected to launch later this year and opt for its in-house Exynos 2200 chip in all markets, including the US. To recall, the Galaxy S22 series was powered by the Exynos 2200 SoC in Europe and it was Samsung’s first chip with an AMD GPU and was a mess, a Sam Mobile report added.

The upcoming Samsung Galaxy S23 FE specs could include a 50MP rear camera, which will be a big upgrade from its predecessor.  It is known that the Galaxy Fan Edition (FE) lineup from Samsung comprises the upper-mid-range segment of smartphones. The South Korean tech giant did not launch the Galaxy S22 FE due to the global chipset crisis in 2022, but this year, it may refresh its Galaxy FE series.