Will Market Price Bounce After Samsung Finally Decide To Cut Chip Production ?

Samsung Electronics has declared that it will decrease chip production

as a result of a dramatic decline in semiconductor demand globally, causing prices to fall sharply

 

 

"We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured,"

the company said, referring to customers with adequate stockpiles of chips. 

 

"Samsung talking about production cuts is evidence of how bad the current slump really is," Greg Roh, the head of research

at Hyundai Motor Securities, told The Guardian. 

 

Meanwhile, Micron Technology in the US, SK Hynix, a fellow South Korean manufacturer, And Kioxia which are the main manufacturer in Japan have also cut back on manufacturing few months ago.

 

Companies are buying fewer chips in an effort to lower their stockpiles, which has been linked to a weakening global economy.

 

However, as a result of customers limiting larger purchases in the face of the rising cost of living and rising food and energy prices, demand has since decreased.

 

Samsung has previously discussed making tiny adjustments, such as halting output to upgrade production lines.

Yet, it has now acknowledged that it will be drastically reducing chip manufacturing, indicating that it will be concentrating on reducing the manufacture of memory chips by a large amount, especially that of products with supply secured.

 

Samsung has said that, despite the output reductions, it will keep funding infrastructure and research. To what extent will the company stick to its investment intentions for this year, the corporation did not confirm.

 

While SK Hynix and Micron both reduced their investment projections by more than 30% in September and October, respectively. SK Hynix stated that it would more than halve its capital expenditure in 2023 compared to 2022.

 

According to projections, Samsung will report a quarterly profit of 600 billion won ($450 million) from January through March, down roughly 95.8% from 14.12 trillion won in Q1 2022. 

 

Although the company wouldn't reveal its results until later this month, Bloomberg data indicates that analysts anticipated it to report a 1.4 trillion won quarterly profit for Q1. The company predicted that its first-quarter revenue would decrease to 63 trillion won from 77.78 trillion won a year earlier

 

How do you think of the production reduction ? Will it push market price bounce soon or still take few months?