Samsung cuts memory chip output after warning of massive 96% drop in Q1 2023 profits

The company shared with investors the news of its expected 95.8 percent YoY drop in operating profits for Q1 2023.


Samsung recently shared some disconcerting news about its operating profit for Q1 2023. In investor guidance provided by Samsung, it’s noted that operating profit for the quarter fell 95.8 percent to 600 billion won ($455 million), missing analyst estimates by 1.4 trillion won. With this, not only is Q1 2023 shaping up to be worse than Samsung’s previous quarter, it’s looking like this quarter will be the company’s worst since 2009.

Reasons for the sharp decline have yet to be fully elaborated on by Samsung, with the company pointing to things like a weakening economy and a reduced demand for chips. Speaking of which, in a recent statement, Samsung also shared plans to reduce memory chip production to a “meaningful level.”

"Under the assessment that the company has secured enough volume to respond to future memory demand changes, Samsung is adjusting to lower memory production to a meaningful level centering on products that have secured additional supply as well as optimizing line operations that’s already underway,” Samsung said.

Samsung Electronics Co., Ltd. stock showing shares at 65,700.00 up 700.00 and 1.08 percent
© Yahoo Finance

Samsung doesn't have much explanation for the drop in Q1 2023 other than a weakening economy and lowered demand for chips, with the company estimated to have lost around $3 billion in its memory chip division. Moving forward, Samsung projects solid demand in the mid-to-long term period with plans to continue things like investing in infrastructure to expand R&D investment.

"We have cut short-term production plans but as we project solid demand for [the] mid-to-long term period, we will continue to invest in infrastructure to secure essential clean rooms and to expand R&D investment to solidify tech leadership,” said Samsung.

Now that you’re caught up on Samsung’s Q1 2023 dip and its plans to reduce memory chip production, be sure to catch up with some of our previous coverage, including how Samsung is building the world's largest chip factory in South Korea for $228 billion, and the previous reveal of the S23 phone line and Galaxy Book3 Ultra at Samsung Unpacked.

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Morgan is a writer from the frozen wastelands of Maine who enjoys metal music, kpop, horror, and indie games. They're also a Tetris fanatic who's fiercely competitive in games like Tetris 99... and all games in general. But mostly Tetris. You can follow Morgan on Twitter @Author_MShaver.

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