Samsung Said to Face Lower Profits Due to Less Demands For Memory Chips

Samsung is one of the biggest smartphone manufacturers, but that doesn’t mean it won’t face any issues at all. In light of the declining demand for memory chips, the tech giant released a profit warning. Well, that’s such bad news! For the tech and nology market, this change will matter most. So, what really happened out there? Let’s take things from the beginning.

According to The Korea Herald, it warned a warning about declining revenues and planned to reduce memory chip output in response to dwindling demand. What does this mean? For the first quarter of this year, it projects earnings of around 600 billion won ($455 million). Such an amount represents a decrease of 96% from the same period but back in 2018. Furthermore, the company attributed the recent decline in demand for memory chips, which might be a poor indicator for the computer sector as a whole.

The company released an official statement and explained:

We’re adjusting to lower memory production to a meaningful level… in addition to optimizing line operations that are already underway.

It’s definitely by far one of the tragic news out there. Considering its products’ success, seeing Samsung experiencing such a negative thing is devastating. This thing, though, won’t be permanent.

The COVID-19 pandemic-fueled boom in the IT sector, which was followed by one of the fastest slowdowns ever, was among the largest of all time. Nevertheless, memory costs have plunged since the end of 2021, with DRAM and NAND prices falling by 20 and 15%, respectively, just in the last quarter. And that’s not all! Sales of Samsung’s brand-new Galaxy S23 smartphone have been a bright light, the company claims, contributing to higher earnings. When its earnings report is released at the end of April, further information will be made available.

With 40.7 and 31.4 percent of the global market share for DRAM and NAND flash memory chip manufacture, respectively, Samsung is actually the industry leader. These chips are found in a wide range of gadgets, including smartphones, computers, and smartwatches. Thus, the excess supply of memory chips indicates that the continuing global economic recession has severely reduced demand for these items.