Samsung to extend production cuts post $7 billion chip loss in 2023 so far

Recently, Samsung revealed its earnings guidance for the second quarter, reporting a 95 percent profit drop. Due to a sharp decline in its semiconductor business, Samsung announced plans to extend production cuts because a demand recovery is largely constrained to high-end chips used in AI.

Reuters reports that the decision underscores the depth of the unexpected memory chip business downturn, which led  Samsung to incur a record $7 billion (8.9 trillion won) operating loss from its bread-and-butter chip business in the first six months of this year.

“Production cuts across the industry are likely to continue in the second half, and demand is expected to gradually recover as clients continue to destock their (chip) inventory,” Samsung, said in a statement.

Samsung said it spent 14.5 trillion won in capital expenditures during the second quarter, of which 13.5 trillion won was spent on chips.

Jaejune Kim, executive vice president of Samsung’s memory business, told analysts on an earnings call that it would extend its production cuts and make additional output adjustments for certain products including NAND flash memory chips, which are used to store digital data.

Source – Reuters