Samsung cuts chip output as demand and profits slide
Samsung Electronics is set for its worst quarterly profit in 14 years
Welcome to Multicore for Tuesday, April 11th.
Bit of a grab bag today. Let's start with Samsung Electronics, which has warned of unexpectedly low earnings amid a slowdown in the memory chip market.
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Samsung Electronics Co Ltd 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%.
Samsung released its earnings guidance for the quarter on Friday. These figures provide a range for revenue and operating profit, and the actual amounts invariably fall in the middle of those ranges once the full report is released a few weeks later.
What we don't have right now is a divisional breakdown for how Samsung performed last quarter. What we do know is that it'll be the company's lowest operating profit for 14 years, which isn't great whichever way you spin it — and memory is by far the most important driver of the company’s profits.
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