Samsung’s semiconductor business swings to loss in Q1

Samsung expects chip demand to rebound in the second half

South Korean tech giant Samsung Electronics reported a KRW 4.58t operating loss in its semiconductor business in the first quarter, plunging from the KRW 8.45t profit it booked a year ago on sluggish chip demand.

Samsung, the world’s largest memory chip maker, said the loss booked by its Device Solutions (DS) Division dealt a huge blow to the company’s overall operating profit which dropped 95% to KRW 640t last quarter.

The firm said its memory chip making business was hit hard by the waning demand for tech devices and as clients cut back on spending amid a global economic slowdown.

“Looking ahead to the second quarter, as major hyperscalers invest more conservatively in servers and customers continue to adjust their inventories, limited demand recovery is expected,” Samsing said in its latest financial results released on Thursday.

The Korean manufacturer expects demand for memory chips to rebound in the second half of the year on the back of smartphone launches, PC promotions and expansion of new CPU adoption.

In its phone-making business, Samsung MX division’s operating profit managed to inch up by 3% to KRW 3.94t year on year mainly due to strong sales of its premium Galaxy S23 series.

“We will maintain our leading position by leveraging our differentiated technology in
customers’ new offerings and ramp up sales by enhancing the performance of foldable products in the relatively solid high-end smartphone market,” it added.

Samsung had announced plans of a meaningful cut in memory chip production in a move that analysts expect will support prices.