Samsung Chairman Lee Jae-yong Insists on Maintaining Chip Production Despite Declining Profits

Samsung Electronics has reportedly decided to maintain its position of not artificially reducing chip production, according to South Korea's "Hankyo Daily". Despite the company's declining profit margins, Samsung Chairman Lee Jae-yong held a meeting with executives of the chip department on the 20th and made the decision not to cut production.

The Need to Cut Production

While some executives raised the need to cut production, Lee Jae-yong stood firm in his decision not to do so. However, the report suggests that Samsung may hold another seminar in early April before releasing its preliminary results for the first quarter, which could lead to a change in the company's position on production cuts.

Reports of Production Reductions

Earlier, several Korean media outlets cited NH Investment Securities in reporting that Samsung was reducing production. Test and component manufacturers have also confirmed that the number of Samsung orders in the first quarter of 2023 will decrease by more than 30%. Analysts at NH Investment Securities have pointed out that Samsung's DRAM inventory level is high, at 21 weeks, and that the company may have to increase production cuts.

Lee Jae-yong's Visit to China

On the afternoon of the 23rd, Samsung Electronics Chairman Lee Jae-yong flew to Beijing by chartered plane to attend the China Development Forum (CDF) 2023 annual meeting held from the 25th to the 27th of this month. This is Lee Jae-yong's second visit to China in nearly three years, since he inspected Samsung's Xi'an semiconductor factory in May 2020.

Implications for Samsung

Samsung's decision to maintain its position of not artificially reducing chip production may have both positive and negative implications for the company. On the one hand, it shows the company's determination to maintain its market position and not to be swayed by short-term concerns about profits. On the other hand, if production cuts become necessary in the face of declining demand, Samsung may find itself with an overstock of inventory, which could lead to further declines in profit margins.

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