A report on Samsung reducing the production of memory chips after estimating a 96% decline in its quarterly profits.
Samsung’s sales have been severely reduced by the sluggish global economy and weak demand after the Covid pandemic. Preliminary figures showed that the company’s profits fell by 600 billion won (£366 million) in January-March, Compared to 14 trillion won the previous year.
Reducing production:
The company decided to reduce the production of memory chips to a significant level. Especially those whose supplies are secured. The company’s shares rose more than 4% despite this decision.
Economic impacts:
Analysis indicates that demand for memory chips increased during the lockdown period resulting from the Covid pandemic. As consumers purchased new electronics for use at home. And now, The industry is suffering from a shortage of memory chips. But many chip manufacturers are having difficulty finding a balance between their inventory and current demand.
The effect of the “open market”:
Analysis indicates that this period will witness a depletion of inventories and a return to a normal pattern of purchasing within the next 3-6 months. This leads investors to be optimistic about the recovery of the market in the chip industry.
Effects on Samsung:
facing samsung, The world’s largest producer of televisions, tablets and smartphones, Challenges with losses in DRAM and NAND memory premiums, It needs to update process technology in its factories due to delays over the past few years.
Investor Prospects:
Investors see Samsung’s announcement of production cuts as a sign of a market recovery in the chip industry. It is expected that the inventory “digestion” phase will be completed within the next 3-6 months.
other details:
The company is scheduled to release detailed earnings reports later this month.
Frequently Asked Questions:
1. Why is Samsung reducing the production of memory chips?
The reduction in production comes in response to demand fluctuations resulting from the slowdown in the global economy and the decline in demand after the Covid pandemic.
2. What are the expected impacts on the chip market?
Investors hope that Samsung’s announcement of production cuts will signal a market recovery in the chip industry.
3. How might this impact the global economy?
This could have an impact on other industries that rely on memory chips, This is based on demand and supply in the market.
Market strength and demand fluctuations remain ongoing challenges for leading companies. Specifically for companies like Samsung, which play a vital role in the technology and electronics industry.
