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Samsung Electronics not to slash investment or production this year

By Park Yoon-bae Posted : February 1, 2023, 10:53 Updated : February 2, 2023, 02:11

[Courtesy of Samsung Electronics]

SEOUL -- Samsung Electronics has made it clear that it will not reduce investment or production this year in the face of its deteriorating performance and falling global demand for semiconductors.
 
The clarification came on January 31 when Samsung, the world’s largest memory chip and smartphone maker, announced its disappointing earnings results for 2022.
 
The company said that its sales hit an all-time high of 302.23 trillion won ($245.55 billion) last year, up 8.1 percent from 2021. However, its operating profit fell 16 percent year-on-year to 43.37 trillion won.
 
In the fourth quarter of 2022, Samsung’s operating profit tumbled 69 percent to an eight-year low of 4.3 trillion won from a year before. Its sales also shrank 8 percent to 70.46 trillion won.
 
The plunge was attributed to sagging global demand for not only memory chips and smartphones, but also TVs and other home appliances. Market watchers said that the electronics industry, especially the semiconductor sector, has entered a downward cycle.
 
However, Samsung quashed speculation that it might cut down on investment in chip-making. It said during an earnings call that the company will continue to make infrastructure investments in order to prepare for medium- and long-term demand.
 
Samsung said that its facility investments this year will be similar to the level of previous years, adding that such investments are needed to install clean rooms and other facilities. It also plans to increase investments in research and development (R&D) to improve its technological competitiveness.
 
The IT giant also reaffirmed that it has no plan to reduce the production of memory chips, despite its nose-diving operating profit in the October-December period amid the global supply glut of semiconductors.
 
Samsung’s position is a far cry from a move by its rivals such as Micron Technology and SK hynix to slash their investment and production to cope with the slumping semiconductor business amid a worldwide economic downturn.
 
Nevertheless, the IT giant has left open the possibility of a “natural or technical” cut in memory chip production. It seems to be necessary for the company to cut production temporarily in case of factory maintenance and the realignment of production facilities.
 
 

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