Samsung’s memory chip business is coming off a nightmare of a quarter, with high inventories combined with falling demand contributing to a nearly $3.4 billion USD (about $4.63 billion CAD) loss from the division.
As reported by CNBC, the unit is often the company’s most significant profit driver. The losses on the chips contributed to Samsung’s quarterly operating profit dive of 95 percent on the quarter.
According to Bloomberg, one of the biggest causes of the losses goes back to the start of the pandemic, which saw smartphone and PC makers stockpile chips to get ahead of supply issues. Now, companies are left with loaded inventories as consumer demand has dropped off amidst high inflation.
The South Korean tech giant will no doubt be hoping its chip business numbers improve as the year goes on, with the recent news marking Samsung’s lowest quarterly operating profit since 2009. The company will hope that new smartphone and PC launches may increase demand, as well as hopes for an economic recovery in China, which Bloomberg accounts as the largest market for PCs and smartphones.
The news may not come as a surprise, as Samsung showed signs of a poor quarter in its earlier preliminary earnings. It plans to cut its memory chip production significantly in order to cut down a nearly 70 percent decline in prices over the previous nine months.
Despite the company taking a hit on its memory chips, the smartphone division was able to recoup some of the losses with a decent quarter, thanks in no small part to the launch of the Galaxy S23 lineup.
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