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Samsung Cutting Production Of Memory Chips To Stop Losses

The chip production business Samsung Device Solutions (DS) recorded massive shortfalls this year with an expected Q3 operating loss of $4.6 billion, leading Samsung to reduce production targets.

Analyst Kim Dong-won from KB Securities forecasted the Q3 loss, but the operating loss in Q1 was also high at $5.3 billion.

Other analysts are predicting reduced losses for Q3, but the other shortfalls this year appear to foreshadow what’s to come.

According to Kim Dong-won, production cuts of DRAM and NAND chips will be slashed by 30% and 40% for the rest of the year, with Samsung already reducing DRAM chips by 20% and NAND flash chips by 30% for the 1st half of the year.


Additionally, with the current excess of chips, it will take at least another quarter before supply and demand can be balanced again.

Before this year’s loss, the memory chip side of Samsung DS division was considered to be the tech giant’s “cash cow” but not anymore.

In Q2 2023, DS was recorded as bringing in $17 billion of Samsung’s total $69.5 billion in revenues.

In comparison, the division produced $33 billion of the total $89.4 billion in revenue in Q2 2022 and recorded an operating profit of $11.5 billion.

Between the demand decrease and DS pumping money into its new production line at the Pyeongtaek Campus so it becomes operational, all of these issues have impacted revenue.

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