Samsung to extend production cuts after $7 billion chip loss in H1
By Joyce Lee and Ju-min Park
SEOUL (Reuters) -Samsung Electronics on Thursday struck a cautious note on the global semiconductor outlook, announcing plans to extend production cuts because a demand recovery is largely constrained to high-end chips used in artificial intelligence.
The move underscores the depth of the unprecedented memory chip industry downturn that led the South Korean firm to incur a record 8.9 trillion won ($7 billion) operating loss from its bread-and-butter chip business in the first six months of this year.
«Production cuts across the industry are likely to continue in the second half, and demand is expected to gradually recover as clients continue to destock their (chip) inventory,» Samsung (KS:005930), the world's biggest memory chip maker, said in a statement.
Jaejune Kim, executive vice president of Samsung's memory business, told analysts on an earnings call that it would extend its production cuts and make additional output adjustments for certain products including NAND flash memory chips, which are used to store digital data.
The comments eased concerns about chip oversupply and boosted Samsung shares by 1.7% and smaller rival SK Hynix's shares by 9%.
Samsung's chip division reported a 4.36 trillion won loss in the April-June quarter, a continued divergence for what is normally the company's most important cash cow. It had reported a 9.98 trillion won profit a year earlier.
Chip losses shrank slightly from the first quarter's 4.58 trillion won due to strong memory chip demand from AI, which led to higher-than-expected shipments of DRAM chips that hold information from applications while the system is in use.
Samsung's chip contract manufacturing business, which counts mobile chip designers
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