Samsung to start a "meaningful" production cut after it earlier reported a 95% drop in Q1.
Per CNBC
Samsung has recently cited a weaker demand for chips as the reason for its profits dropping by 95% in the first quarter of 2023. This comes as the company's biggest business, memory chips, saw a significant drop in price despite a weaker demand.
Company operating profit saw a drop from 14.12 trillion won, or around $10.517 billion, in 2022 down to just 640 billion won, or around $478.55 million, this first quarter. The company's revenue was $47.6 billion, or 63.75 trillion won, below analyst expectations at 63.9 trillion won.
SK Kim of Daiwa Securities Capital Markets gave a statement during CNBC's Squawk Box Asia, regarding the company's "disappointing numbers." It was also noted that one move the company made still saw a positive reaction.
Kim: “Samsung Electronics announced the disappointing number for the first quarter, but at the same time, they announced a meaningful production cut amid the severe memory chip downturn. After that, the market reacted positively on the news,”
The recent operating profit numbers were Samsung's lowest ever since the first quarter of 2009, almost 15 years ago. In response to this, the company decided to cut its memory chip production.
Samsung's decision to cut production follows some of its smaller rivals, SK Hynix and Micron, which also decided to drop production.
Kim: "SK Hynix announced their disappointing number but they also guided it for recovery. If we got a rebound, it’s mostly driven by the production cut and some restocking demand. So we see, despite the disappointing earnings number, some positive investor sentiment on the stock,”
Recently, Apple CEO Tim Cook announced that the company would embark on US-made chips with an Arizona TSMC factory. This would provide logistical convenience to the company, and a solution to its semiconductor supply issues.
See flow at unusualwhales.com/flow.
Other News:
- Samsung's operating profit dropped over 95% for the three months ending in March, resulting in the lowest profit output since 2009
- Apple CEO Tim Cook Says Company Will Embark in US-Made Chips with Arizona TSMC Factory
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