Samsung the world’s largest chipmaker, is set to continue chip production cuts in Q3 2023 to narrow down its chip losses. The company began reducing chip output earlier this year, following the lead of its peers, SK Hynix Inc. and Micron Technology, to resolve a persistent supply glut.
Analysts Kim Dong-won at KB Securities expect that Samsung’s Device Solutions (DS) division, which oversees its chip business, to report losses of around 4 trillion won ($2.96 billion) in Q3, which is lower than the 4.35 trillion won loss recorded in Q2.
This is due to the increased chip production cuts that Samsung has implemented since the second half, with DRAM cuts now at 30% and NAND Flash cuts at 40%, up from 20% and 30%, respectively, in Q1.
Samsung’s DS division reported an operating loss of 4.6 trillion won in Q1, its first financial loss in 14 years. This was mainly due to the high chip inventories amid lower global demand.
However, the analyst believes that Samsung’s production cuts, particularly the 50% cut for NAND Flash, could have a ripple effect and lead to a price uplift for their primary products.
Despite this optimism, some analysts believe that Samsung’s chip performance may still fall short of expectations in the third quarter due to increased depreciation costs.
All in all, Samsung’s efforts to reduce chip production are expected to narrow its chip deficit in Q3, potentially leading to improved chip prices and demand. However, the impact may vary depending on production costs and market dynamics.
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(Via)
