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Samsung seen to cut memory chip production following losses

Samsung Device Solutions is seen to cut chip production after recording losses in Q1 2023.
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Rest of the year not looking good

Samsung Device Solutions, which is the company’s chip production arm, recorded losses in the first quarter of the year. This is its first quarter in red since 2009.

The trend is seen to continue for the rest of the year, thus Samsung is seen to reduce its production targets.

Operating losses in Q1 were at KRW 4.6 trillion (around PHP192 billion) which was lowered to KRW 4.36 trillion (around PHP182 billion) the following quarter. KB Securities analyst Kim Dong-won projects losses in Q3 to be around KRW 4.0 trillion (around PHP167 billion).

Meanwhile, other analysts are seeing smaller losses at around KRW 3.7 trillion (around PHP 154 billion) for Kim Kwang-jin of Hanwha Investment & Securities, and KRW 3.6 trillion (around PHP 150 billion) for Greg Roh of Hyundai Motor Securities.

Samsung already reduced production of DRAM chips by 20 percent and of NAND flash chips by 30 percent in the first half of 2023.

Kim Dong-won sees production cuts to grow to 30 percent and 40 percent in the second half of the year.

The production cut was caused by weak demand for chips. Samsung rivals SK hynix and Micron Technology have already reduced production last year.

Aside from weak demand, Samsung Device Solutions working on operating a new production line at the Pyeongtaek Campus is another reason for the losses.

In the second quarter of 2023, Samsung Device Solutions brought in KRW 14.73 trillion (around PHP615 billion) of the KRW 60.01 trillion in revenues (around PHP 2.5 trillion).

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