Samsung to cut chip output to ride out downturn; shares rally

Samsung Electronics Co Ltd (005930.KS) said on Friday it would make a “meaningful” cut to chip production, following the lead of smaller rivals, as it grapples with a sharp global downturn in semiconductor demand that has sent prices plummeting.

The unusual output cut by the world’s biggest memory chipmaker – with no previous announcement recalled by Samsung officials and analysts – came after it flagged a worse-than-expected 96% plunge in first-quarter profit.

Investors brushed off the profit miss, betting the move by the industry leader would support chip prices that had fallen by about 70% over the last nine months.

Samsung jumped 4.5% in early trading in the biggest one-day rise since September, while rival SK Hynix Inc’s (000660.KS) shares surged 5.6%.

Smartphone and personal computer makers had stocked up on chips during the pandemic when demand for consumer devices surged, but they are now running down inventories as shoppers cut back on purchases amid rising inflation.

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