Berikut Sluggish Market, Samsung Wants to Cut 25% of Chip Production
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iwanrj.com – Jakarta – Samsung plans to cut 25% production of memory chips. The reason is because the memory chip market has been sluggish for the last few months.
quoted Telset from Gizmochina on Tuesday (02/05/2023), Samsung Electronics reported a staggering 95% decline in operating profit for Q1 2023 compared to the same period last year.
The company attributed this significant drop to reduced demand for memory chips. While Samsung has not disclosed the extent to which it will reduce its memory module production, industry analysts expect a cut of around 25%.
Semiconductor analyst Minbok Wi of Daishin Securities estimates that Samsung could reduce memory chip production by 20% to 25% in the first half of 2023, compared with the same period in 2022.
On the other hand KB Securities estimates that Samsung will reduce NAND flash chip production by 15% and DRAM chip production by more than 20%, and the reduction starts in Q3 2023.
Meanwhile Min Seong Hwang, Analyst at Samsung Securities believes that if inventory levels do not fall as expected, the company may need to reduce production further.
Samsung has claimed that it has sufficient memory chip inventories to meet mid- to long-term demand and plans to reduce production of older products.
Although the company hasn’t specified which memory chips will suffer production cuts, it’s just that The Korea Herald reports that Samsung will focus on cutting production of low-cost DRAM modules such as DDR3 and DDR4 due to their dwindling demand.
Instead, the company will concentrate its efforts on high-end memory chips like DDR5 which are rapidly gaining populerity.
The decline in several types of DRAM refers to global market trends. The average contract price of 8GB DDR4 RAM modules fell 19.9% last month, following January 2023’s 18.1% drop.
Although prices stabilized in February and March, they started to fall again this April and May. Market research firm TrendForce forecasts a further 15% to 20% price reductions during Q2 2023 as suppliers grapple with high inventory levels.
While the outlook for Samsung and the chip industry currently looks bleak, some analysts remain optimistic, suggesting that a turnaround could occur in 2024. [NM/HBS]