SEOUL, South Korea – Samsung Electronics mentioned Friday it’s chopping the manufacturing of its pc reminiscence chips in an obvious effort to scale back stock because it forecasted one other quarter of sluggish revenue.
The South Korean expertise big, in a regulatory submitting, mentioned it has been decreasing the manufacturing of sure reminiscence merchandise by unspecified ‘significant ranges’ to optimize its manufacturing operations, including it has adequate provides of these chips to fulfill demand fluctuations.
The firm predicted an working revenue of $455 million for the three months by way of March, which might be a 96% decline from the identical interval a 12 months earlier. It mentioned gross sales in the course of the quarter doubtless fell 19% to $47.7 billion.
Samsung, which is able to launch its finalized first quarter earnings later this month, mentioned the demand for its reminiscence chips declined as a weak international economic system depressed client spending on expertise merchandise and compelled enterprise purchasers to regulate their inventories to nurse worsening funds.
Samsung had reported a close to 70% drop in revenue for the October-December quarter, which partially mirrored how international occasions like Russia’s warfare on Ukraine and excessive inflation have rattled expertise markets.
SK Hynix, one other main South Korean semiconductor producer, mentioned this week that it bought $1.7 billion in bonds that may be exchanged for the corporate’s shares to assist fund its purchases of chipmaking supplies because it weathers the trade’s downswing. SK Hynix had reported an working lack of $1.28 billion for the October-December interval, which marked its first quarterly deficit since 2012.
‘While now we have lowered our short-term manufacturing plans, we count on strong demand for the mid- to long-term, so we are going to proceed to spend money on infrastructure to safe important ranges in clear room capacities and develop funding in analysis and improvement to strengthen our expertise management,’ Samsung mentioned.
Samsung final month introduced plans to take a position $227 billion over the following 20 years as a part of an bold South Korean mission to construct the world’s largest semiconductor manufacturing base close to the capital, Seoul.
The chip-making ‘mega cluster,’ which might be established in Gyeonggi province by 2042, might be anchored by 5 new semiconductor crops constructed by Samsung close to its current manufacturing hub. It will intention to draw 150 different firms producing supplies and elements or designing high-tech chips, based on South Korea’s authorities.
The South Korean plan comes as different expertise powerhouses, together with the United States, Japan and China, are build up their home chip manufacturing, deploying protectionist measures, tax cuts and sizeable subsidies to lure investments.