Samsung’s storage division is expected to suffer a loss of $3.04 billion in Q1 of 2023
After a poor performance in Q4 of 2022, the storage chip business of Samsung has had a disappointing start in 2023. This has resulted in the division experiencing its first loss in profits in 15 years, whereas before Q4 of 2022, it was Samsung’s most profitable department.
The storage division of Samsung suffered a loss of $2.3 billion in January and February of 2023. An internal report indicates that the entire Q1 is expected to suffer a loss of 3.04 billion dollars, which means that the division will suffer a further loss of $740 million in March. However, the extent of the loss in March is slightly smaller compared to the previous two months.
The significant loss suffered in 2023Q1 will affect Samsung’s device solutions business, which includes all storage chips and mobile chips, among others. Even if the semiconductor division remains profitable, the profits will be offset by the storage division, resulting in an estimated loss of around $1.52 billion for Samsung’s device solutions business in 2023Q1.
The cause of the loss is attributed to a simultaneous drop in demand and prices, which is considered normal. A drop in demand will naturally lead to a decline in prices, just as an increase in demand allows chip manufacturers to raise their prices.
As of March 2, 2023, the contract price for 8GB DDR4 memory has decreased by $1.83, a 75% decrease compared to 2019. This is due to the cost decrease resulting from the maturity of the technology and the drop in demand, which has forced Samsung to reduce its prices to maintain sales.
TrendForce predicts that memory prices will drop by 20% in 2023Q1 and 11% in Q2, in addition to last year’s 34% drop.
Unlike other flash memory chip manufacturers, Samsung has not reduced its production but instead mainly maintains it through price cuts and promotions. Samsung is estimated to be gambling on the market’s quick recovery, taking this opportunity to seize the market from its competitors.
Analysts also predict that NAND flash memory prices will decrease by 10% in Q1 and 3% in Q2.
Interestingly, the device solutions division of Samsung borrowed 2 billion Korean won from Samsung Display to finance its semiconductor business. This shows that Samsung is determined to continue its business, even if it means borrowing to cover its losses rather than reducing production.
Furthermore, KB Securities analyst Jeff Kim stated that Samsung will neither reduce its capital expenditure nor artificially reduce chip production for any reason.
Via: TechSpot
