Samsung Electronics has made a rare announcement that it will cut production of memory chips after falling demand in recent months, a stark contrast to the situation during the pandemic. The South Korean group also announced a 95% drop in profit for the first three months of 2023 compared to the first quarter of last year.

Samsung Electronics announced a 19% drop in sales and a 95% drop in profit in the first quarter of 2022. The $450 million figure is the lowest quarterly profit in 14 years.

The smartphone division has been doing well, but the processors have not been doing so well because demand has fallen and Samsung is forced to make “adjustments” in production, that is, to reduce it, so as not to accumulate too much inventory.

Demand for processors increased during the pandemic as people bought millions of electronic devices for use at home. However, gadget sales have plummeted since the end of the pandemic, and the change in trend has also been evident for chip makers, who have seen a sharp drop in demand.

And companies like Micron Technology, Kioxia and SK Hynix cut production a few months ago.

Sources: TechCrunch, BBC