Shulou(Shulou.com)11/24 Report--

On the evening of January 30, Beijing time, according to reports, people familiar with the matter said that Samsung Electronics is considering reducing semiconductor production due to the possibility of huge operating losses in the first quarter of this year.

Samsung Electronics, the world's largest maker of memory chips, is considering cutting back on chips to produce fewer DRAM and NAND chips, the person familiar with the matter said.

This move means that Samsung Electronics will also change its consistent position, that is, stick to the chip production plan. Samsung Electronics executives said in October that the company would stick to its production plan while promoting chip manufacturing technology to tide over the industry's oversupply and widen the technology gap with competitors.

But with the industry likely to slow more than expected, Samsung Electronics is now considering following its competitors by cutting capital expenditure and chip production to support falling prices and ease the supply glut, according to people familiar with the matter.

Before that, chipmakers such as SK SK Hynix, Micron Technologies and Kioxia have all begun to cut production.

Citigroup Global Markets (Citigroup Global Markets) said in a research note that the possibility of Samsung adjusting chip supply by slashing investment is increasing because the price of memory chips has fallen more than expected and could push Samsung's profitability below the "break-even point".

This pessimistic outlook also highlights the sharp decline in the global technology industry. At present, the technology industry is grappling with the deterioration of consumer demand caused by high inflation, rising interest rates and the economic downturn.

Earlier this month, Samsung Electronics reported its worst quarterly operating profit in eight years as the global economic downturn damped demand for semiconductors from electronics manufacturers. To that end, Samsung Electronics also cut its chip profit forecast by half in 2023.

Samsung Electronics' semiconductor business is likely to post an operating loss of 1 trillion won (currently about $811 million, about 5.5 billion yuan) in the first quarter of this year, compared with an estimated loss of 500 billion won in the fourth quarter of last year, according to industry observers. Analysts also predict that if this adverse market situation continues, Samsung's semiconductor loss could widen to 1.5 trillion won in the second quarter.

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