A Cut in Chip Production by Samsung Electronics May Ease Supply Glut

Samsung Electronics, the world’s largest maker of memory chips, announced last Friday that it would cut memory chip production after it reported Q1 profit that was the smallest in 14 years.  South Korea’s largest company had previously resisted cutting production in an attempt to gain market share from rivals SK Hynix and Micron Technology (MU), which had both been forced to cut output. Samsung’s cuts could help boost memory chip prices, a critical step for the industry’s recovery.

The Covid pandemic has whipsawed the semiconductor industry.  Demand for memory chips soared during the pandemic as consumers locked down at home bought new computers and smartphones.  However, the trend reversed as the pandemic eased and the global economy suffered economic shocks from soaring inflation and rising interest rates.