The semiconductor prices decline may give positive expectations and it may ease in the future as Samsung Electronics officially announced production cuts during the first quarter of the 2023 earning report. Samsung’s operating profit fell by 96% in the first quarter of this year. As demand for memory semiconductors continues to be weak, the industry is paying more attention to the decision to cut production rather than Samsung Electronics’ performance.
The South Korean tech giant officially acknowledged production cuts, “We are adjusting memory production down to a meaningful level” along with the provisional results for the first quarter. Regarding whether to cut production, Samsung Electronics said, “We are adjusting memory production down to a meaningful level.” Industry analysts say that it would have been difficult for Samsung Electronics to maintain its current position as the semiconductor industry has worsened compared to the forecast in January of this year when it announced its fourth quarter results last year.
Rok-ho Kim, an analyst at Hana Securities, said, “For Samsung Electronics, demand for semiconductors has been sluggish, contrary to expectations, and the resulting annual deficit and concerns about cash crunch are probably the factors that made the decision to cut production.” “If Samsung Electronics had not cut production, memory semiconductor prices The decline would have continued, but depending on the size of this production cut, the extent of price decline in the second and third quarters will fluctuate.”
Wi Min-bok and Park Kang-ho, analysts at Daishin Securities, said, “We are expecting a 15-20% reduction in wafer input compared to the end of last year.” It may be limited,” he said. Regarding Samsung Electronics’ production cuts, Kim Woon-ho, an analyst at IBK Investment & Securities, said, “There is an expectation that the oversupply phase can be resolved sooner than previously expected.” We hope that the adjustment will allow us to find a balance between supply and demand.”
Meanwhile, Samsung Electronics operating profit (provisional) on a consolidated basis in the first quarter of this year was 600 billion won, down 95.75% from the same period last year. It is the first time in 14 years since the first quarter of 2009 (590 billion won) that quarterly operating profit fell below 1 trillion won.