Is the party over at the market? Samsung Electronics said on Friday it expects first-quarter profit to fall by more than 95%, its biggest quarterly drop in 14 years, as the global economic slowdown hit chip sales.
The South Korean technology giant expects its operating profit for the January-March period to fall 95.7% to 600 billion won, the lowest level since the first quarter of 2009.
The anticipated drop in profit is due to “continued weakness in demand for IT products that has deteriorated performance across all sectors,” Samsung said in a statement.
production reduction
“We are reducing memory chip production to a significant level,” Samsung added, noting that the company had “stocked sufficient quantities of certain memory chips to meet changing market demand in the future.”
South Korean chipmakers, led by Samsung, have posted record profits in recent years thanks to skyrocketing prices for their products, but the slowdown in the global economy has hit the industry hard.
However, recent profit erosion hasn’t stopped Samsung from making bold investments: In March, the company revealed plans to spend $227 billion over the next two decades building the world’s largest chip-making center, in Yongin, south of Seoul. .
The move is part of the South Korean government’s efforts to invest heavily in six key technologies, including chips, displays and batteries, all areas where the country’s tech giants are already well positioned.
The company is the world’s largest smartphone maker and the flagship subsidiary of giant Samsung Group, by far the largest of the family-owned conglomerates that dominate business in Asia’s fourth-largest economy.
It is expected to publish its final earnings report at the end of the month.
Source: BFM TV
