Samsung Device Solutions, the division of the Samsung Group that is responsible for the production of the company’s chips, has recorded losses during the first three quarters of the year, and although they have been reducing since the beginning of 2023, they are not doing so quickly enough. Furthermore, according to Yonhap News Agency, the forecasts for the coming months do not seem to be much better. Therefore, the company has made the decision to further cut its chip production to try to reduce their losses.
According to various predictions, the quarter that has just ended has closed with losses for the division close to 3,000 million dollars, although other sources cite an amount that would be between 200 and 300 million less. In any case, the reduction in chips is going to be notable, and adds to what had already been decided after the results of previous quarters.
The results obtained by the division in the first half of the year have already reduced production by 20% for DRAM memory chips, and by 30% for NAND Flash chips. But for this last half of the year these reductions will increase until they reach a total production cut for DRAM chips of 30%, and 40% for NAND Flash chips.
The main reason for this reduction, in addition to the bad economic data related to its production and distribution, is the reduction in demand, which already led several rival companies to Samsung in the production of chips to reduce their manufacturing last year. There is also an excess supply of chips at the moment, and it will take a while for their supply and demand to balance out.
However, the low demand for chips is not the only reason why the division in charge of their manufacturing at Samsung has recorded losses. At the moment, The group is working on launching a new production line at its facilities in Pyeongtaek (South Korea), which is why it is making heavy investments to get the plant into operation.