Samsung Electronics Co. said it's cutting memory chip production after reporting its slimmest profit since the 2009 financial crisis, a significant step toward ending a supply glut that had cratered prices across the industry.
[...] Operating profit at the world's largest maker of memory chips plunged more than 95% to 600 billion won ($450 million) for the three months ended March, missing the average analyst estimate of 1.4 trillion won. Sales fell 19% to 63 trillion won.
[...] South Korea's largest company had resisted pulling back despite the downturn, in part to grab market share from rivals SK Hynix Inc. and Micron Technology Inc., which have been forced to cut output.
[...] Samsung's shares rose as much as 4.7% in the highest intraday jump in three months. Hynix shares surged as much as 6.7%. [...] The company had warned that earnings would fall in the first quarter on slowing sales. But memory prices tumbled more than anticipated because of sluggish demand for a wide range of electronics from smartphones to PCs, as consumers and companies navigated recession risks. Despite its post-Covid re-opening, China's market has also not bounced back as quickly as some anticipated. Samsung is estimated to have lost about $3 billion in its memory chip division.
[...] Prices of DRAM - a type of memory used to process data - are expected to fall in the current quarter by around 10%, according to Yuanta's Baik. That follows a roughly 20% slide in the previous three months and a more than 30% drop in the fourth quarter of last year. [...] Inventory at Samsung had swelled to 52.2 trillion won at the end of last year after the company maintained production despite a collapse in demand. The existing high inventory will take time to digest, said TrendForce Senior Vice President Avril Wu. "Slower-than-expected demand in the second half of 2023 will prolong the time required for inventory to get back to normal levels."
(Score: 0) by Anonymous Coward on Sunday April 09, @01:26PM (3 children)
This is not how the system (the system as-sold) is supposed to work. It was presented as "if someone sells for more than they should, someone else will undercut them and you'll get the lowest price".
Back in the day, we wouldn't know about these types of shenanigans; the information revolution has at least made it possible for this information to be shared.
Anyone making the arguments that "it is normal that anyone would charge 'whatever the market will bear'" is f'ing mental and deserves nothing more than a tiny dab of shoe-shine (sold at "whatever the market will bear"), so that they can shine the shoe that stomps on their face before they kiss it.
(Score: 2) by takyon on Sunday April 09, @01:31PM (1 child)
It's a great system. You just have to remember to catch the next memory price fixing class action lawsuit settlement for your $20 rebate.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 1, Funny) by Anonymous Coward on Sunday April 09, @02:01PM
"20 USD with 1 year of 'free'(*) credit monitoring because we are also incompetent as custodians of your data"
(*) Conditions apply, charged at 100/mo unless you cancel at least 18 months before the end of your free monitoring report, via snail mail to a PO box that is never emptied
(Score: 2) by SomeRandomGeek on Monday April 10, @07:42PM
The system is working exactly as classical economics would predict...
In 2021, there was an undersupply of microchips, so the prices went up.
Responding to these price signals, the microchip manufacturers built lots of fabs to make more microchips.
The increased production led to an oversupply, which led to prices going down.
Responding to these price signals, microchip manufacturers are cutting production.
So, in just the last few years we have seen the whole feedback loop. Undersupply leads to price increases. Price increases lead to increased production. Increased production leads to oversupply. Oversupply leads to reduced prices. Reduced prices lead to decreased production.
This is exactly what classical economics predicts. The market is constantly moving towards equilibrium, without ever reaching it.
(Score: 2) by RedGreen on Sunday April 09, @04:06PM (2 children)
Then these fucking parasite corporations can cry me a river while I play. Looks good on the scummy ripoff bastards and their price gouging they have been doing. Hopefully it last for a few years then they can whine on some more about how hard done by they have been done by lack of their new thieving options.
"I modded down, down, down, and the flames went higher." -- Sven Olsen
(Score: 3, Funny) by RamiK on Sunday April 09, @11:31PM (1 child)
The Korean memory and display cartels are gauging because the US doesn't want to compete, forces Japan not to compete AND sanctions China when it tries to compete.
compiling...
(Score: 2) by RamiK on Monday April 10, @10:57AM
(on the Funny mod) Absurd as it sounds, it's the reality we live in: https://biz.crast.net/beijing-chooses-targets-carefully-as-it-goes-on-the-offensive-in-us-chip-wars-the-financial-times/ [crast.net]
compiling...