Samsung is the world’s largest memory chip maker and the second largest contract chipmaker. SAMSUNG
Samsung reported its lowest profit in 14 years in the first quarter of this year due to heavy losses incurred by the chip division.
The South Korean tech giant said on Thursday that it recorded 63.75 trillion won in revenue and 0.64 trillion won in operating profit for the quarter, down 18% and 96% respectively from a year earlier. last year.
Samsung’s Device Solutions division, its chip division, reported an operating loss of 4.58 trillion won. The company said the performance of its memory chip business fell significantly from the previous quarter as overall demand fell amid an economic downturn and weak customer spending.
Other memory chip companies SK Hynix and Micron also reported heavy losses in their latest fiscal quarter due to sluggish demand and an oversupply of memory chips. All three companies have announced that they are planning to reduce production output.
Slowing demand for DRAM, which has been in high demand by server customers for many years now, is one of the most important causes of the downturn. In the first quarter, Samsung said its bit growth could not meet previous guidance, meaning it produced less DRAM than planned. As for NAND, however, the tech giant says it has achieved its goal and beyond as most products are moving to higher-density chips, allowing Samsung to sell more products. more premium products.
Besides memory, Samsung’s logic chip business also saw weak demand in the quarter. Sales of SoCs, sensors and display chips all fell while demand for contract or foundry chip manufacturing services also fell.
Samsung said that although the demand recovery for chips in the coming quarter will be limited, the market is expected to gradually recover as customer inventories return to normal.
Meanwhile, Samsung’s Device Experience Division, the consumer electronics division, reported an operating profit of 4.21 trillion won. Of this total, MX Business, Samsung’s smartphone business unit, contributed 3.94 trillion won, one of the most productive in recent years. Demand for high-end smartphones during the quarter and the strong performance of the Galaxy S23 Ultra allowed the business unit to secure double-digit profits, Samsung said.
Samsung Display also contributed 0.78 trillion won, thanks to high demand for foldable display panels from smartphone makers and QD-OLED panels from TV makers. And despite the poor overall performance in the first quarter, Samsung spent 10.7 trillion won on its facilities, the highest spending figure for the quarter so far. Of this total, 9.8 trillion won was spent on its chip manufacturing facilities to prepare for future supply, the tech giant said.
