每日英語跟讀 Ep.K557: Samsung to Cut Chip Production Amid 96% Drop in Profits
Samsung Electronics, the world's largest memory chip maker, announced on Friday that it would make a significant cut to its chip production due to the sharp decline in global demand for semiconductors, which has sent prices plunging. The move follows a 96% drop in first-quarter profits, worse than expected. Other chipmakers, including SK Hynix and Micron Technology, have also reduced their production.
Smartphone and personal computer makers ramped up purchases of chips during the Covid-19 pandemic, leading to a global chip shortage. However, demand has waned as consumers cut back on bigger purchases amid the cost of living crisis, with food and energy bills soaring.
Samsung said demand had dropped because of a weaker world economy and companies buying fewer chips as they run down their inventories. "We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured," the company said, referring to customers with sufficient inventories.
Despite the cut, Samsung said it would continue to invest in infrastructure and research. However, it did not say whether it was sticking to its investment plans for this year. SK Hynix said in October it would more than halve its capital spending in 2023 compared with 2022, while Micron cut its investment plans by more than 30% in September.
The news of the production cuts did not seem to worry investors, who hope that the output cut will support chip prices, which have fallen by 70% over the past nine months. Analysts are forecasting that Samsung's chip division, which usually generates about half of group profits, will report a record loss of 2.1tn won in the quarter.
"The fact that the number one market share firm is joining production cuts lifted shares. SK Hynix and Micron have declared production cuts but only Samsung had not, so the market was watching for it. Today's production cut signal casts a positive outlook for a memory chip rebound in the second half of the year," said John Park, an analyst at Daishin Securities.
Samsung's estimated operating profit fell to 600bn won between January and March, from 14.12tn won a year earlier, the lowest profit for any quarter in 14 years. The company will report detailed figures later this month.
三星電子估計其營運利潤在一月至三月間從去年同期的14.12兆韓元下降至6000億韓元，是14年來任何一個季度的最低收益。公司將在本月晚些時候公布詳細數字。Reference article: https://www.theguardian.com/technology/2023/apr/07/samsung-to-cut-chip-production-as-profits-plunge