Samsung is cutting the production of memory chips after operating profits drop 95%
It's the worst profit the company has seen since 2009.
Samsung employees holding wafers of polished silicon. (Image source: Samsung)
Samsung has just announced production cuts for its NAND and DRAM memory chips. The company is the world's largest supplier of NAND and DRAM, but even then, the company could not no longer weather the slump that percolates the entire industry.
According to Bloomberg, Samsung's sales in Q1 were down 19% and operating profits were down a whopping 95%. This would be the company's smallest profit since 2009.
Though a sales drop was said to be expected – the memory industry is highly cyclical – this was far beyond what they were expecting, leading the company to announce production cuts.
Still, the company says these cuts are short-term measures and that they will continue to enact their long-term investment plans in other fabs.
Samsung said:
We have cut short-term production plans, but as we project solid demand for the mid-to-long term, we will continue to invest in infrastructure to secure essential cleanrooms and to expand R&D investment to solidify tech leadership.
Samsung did not reveal how much they would be reducing production. However, analysts believe the current oversupply issue would persist until the third quarter of the year. In other words, now is a pretty good time to be getting new memory for that system upgrade that you've been contemplating.
Source: Bloomberg via Anandtech
Our articles may contain affiliate links. If you buy through these links, we may earn a small commission.