It’s the scale of Samsung Electronics’ business, making the company the largest memory maker, that has long allowed it to sustain production volumes and investment levels in the face of an industry crisis. And yet the South Korean giant’s profit fell more than 90% to $450 million after its first-quarter results, its lowest since 2009.
At the same time, revenue fell to $47.7 billion, and the company will release a detailed earnings report before the end of this month. The available information was already sufficient for management to make a decision to reduce the volume of storage production. Many competitors have done it before, but Samsung stuck with the last one. Memory chip prices fell more than expected in the first quarter. Samsung ended the fourth quarter of last year with an estimated $39.6 billion in inventories, but didn’t dare to reduce production levels at the time.
According to analysts, Samsung lost about $3 billion in losses to semiconductor products last quarter, and its contract business shouldn’t turn a profit. According to forecasts by Yuanta Securities analysts quoted Bloomberg, RAM prices will fall 10% this quarter. They fell by 20% in the first quarter and by more than 30% in the fourth. All this could only negatively affect the dynamics of Samsung’s financial performance.