Samsung, the global leader in DRAM and NAND flash memory chip production with 40.7 and 31.4 percent shares respectively, has issued a warning of lower profits amidst falling demand for memory chips, according to The Korea Herald. This development could potentially have a negative impact on the global technology market.
Samsung expects to earn only 600 billion won ($455 million) in the first quarter of 2023, a significant drop of 96 percent compared to the same period last year. The company has attributed this decline to the decreasing demand for memory chips and has outlined plans to cut back on memory chip production in response.
In a statement, Samsung stated that it would be adjusting its memory production to a significant level, while also optimizing line operations that are already underway. However, the company plans to continue investing in clean room infrastructure and expanding its R&D spending, as it anticipates improved memory chip demand in the mid-to long-term.
The oversupply of memory chips is indicative of a notable decrease in demand for consumer devices such as smartwatches, mobile phones, and laptops, which utilize these chips. This trend suggests that there has been a slowdown in the global economy, leading to reduced consumer demand for such products.
This decline in demand for memory chips comes after a period of significant growth in the tech industry, fueled by the COVID-19 pandemic. However, since late 2021, memory prices have experienced a sharp drop, with DRAM and NAND prices down by 20 and 15 percent respectively in the last quarter alone.
Despite the challenging market conditions, Samsung has seen some positive results from sales of its new Galaxy S23 smartphone, which have helped to bolster its profits. More details regarding the company’s earnings will be revealed in its upcoming earnings report, which is expected to be released at the end of April.
In conclusion, Samsung’s warning of lower profits due to falling demand for memory chips raises concerns for the global technology market. The oversupply of memory chips and declining prices highlight the impact of the ongoing global economic slowdown. Nevertheless, Samsung remains committed to investing in research and development, and is optimistic about the mid- to long-term outlook for memory chip demand. The company’s upcoming earnings report will provide further insights into its financial performance in the face of these challenges.
