Samsung’s Semiconductor Deficit Narrows, Plans Continued Production Cuts

Samsung's Semiconductor Deficit Narrows, Plans Continued Production Cuts

Samsung Electronics announced on Wednesday that it successfully reduced the size of its semiconductor deficit in the October-December period due to ongoing efforts to cut chip production. During the fourth-quarter earnings call, Kim Jae-june, executive vice president of memory marketing strategy, highlighted the rapid decrease in chip inventories, particularly for DRAM memory chips, due to the revised chip output.

Samsung intends to persist in reducing its memory manufacturing volume throughout the year to normalize inventory levels. Kim stated that selective adjustments in production levels for DRAM and NAND chips are planned for the year’s first half, aiming to reach normal inventory levels by the end of the first half.

The company anticipates that sales of premium products, including HBM3 products, will represent over half of its memory chip sales within the first half of the year, expanding to 90 percent in the second half. Last year, Samsung announced production cuts for the first time since 1998, indicating a significant departure from its previous stance. This move aimed to reduce memory production to a “meaningful level.”

In its recent earnings report, Samsung disclosed a fourth-quarter operating profit of 2.82 trillion won ($2.11 billion), marking a 34.4 percent year-on-year decline. This was attributed mainly to sluggish chip business performance and a turnaround in on-demand recovery in the memory chip segment, falling short of analysts’ projections.

The company reported a net profit drop of 73.4 percent year-on-year to 6.34 trillion won, with sales declining 3.8 percent to 67.77 trillion won for the fourth quarter. Samsung’s chip business posted an operating loss of 2.18 trillion won in the fourth quarter, despite a turnaround to profit in its DRAM business. The mobile business, however, saw an operating profit of 2.6 trillion won and sales of 39.5 trillion won.

To adapt to a recovering IT market, Samsung plans to expand sales of its value-added products, including its latest flagship Galaxy S24 smartphones, aiming to solidify its position in the AI smartphone market. Following the earnings report, Samsung’s shares experienced a 2.15 percent decline, closing at 72,700 won on Wednesday.

TechGolly editorial team led by Al Mahmud Al Mamun. He worked as an Editor-in-Chief at a world-leading professional research Magazine. Rasel Hossain and Enamul Kabir are supporting as Managing Editor. Our team is intercorporate with technologists, researchers, and technology writers. We have substantial knowledge and background in Information Technology (IT), Artificial Intelligence (AI), and Embedded Technology.

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