Samsung is expected to cut production of memory chips by as much as a quarter, after remarking on its inventory glut in last week’s earnings call.

This comes after Samsung’s operating profits for the first quarter of 2023 fell by 95 per cent, year-on-year, driven by a A$5.1 billion loss in its semiconductor division.

Samsung is the world’s largest memory chip maker, so this is another clear sign of the inventory bloat that plagues the sector, as a wider slowdown in spending across the PC and tech sector.

Market analysts have estimated a production cut of between 15 to 25 per cent. KB Securities estimated that Samsung will scale back its NAND flash production by 15 per cent in the June quarter, with DRAM production dropping by more than 20 per cent in the September quarter.

Samsung Securities analyst Hwang Min-seong says “more cuts could be carried out if the ongoing reduction fails to lower the tech giant’s inventory level sufficiently.”

Analysts expect Samsung to focus production on advanced memory chips, such as the DDR5.