Samsung Electronics may have the worst performance in 14 years and refuse to cut production to delay the recovery of the semiconductor industry

 Samsung's operating profit for the quarter is expected to plummet about 90 percent to 1.45 trillion won. That would be the lowest on record since 2009. Other analysts expect the company to post a quarterly profit of less than 1 trillion won, or even barely make a profit.

While the semiconductor industry is highly cyclical, the industry has had a history-making cycle during the COVID-19 pandemic. During the epidemic, as consumers rushed to buy new computers and mobile phones, demand surged, prompting chip companies such as Samsung to increase production capacity. However, as the impact of the epidemic gradually diminished and sales fell, high inflation, rising interest rates and other global economic problems had a further negative impact on performance.

Lansheng Technology Analysis: "The biggest problem at present is that the chip inventory is too high. Therefore, companies need to reduce inventory by reducing production."

According to data released by South Korea's trade ministry, the country's chip exports fell by 34.5% in March and fell by more than 40% in February. South Korea's total exports to China, its largest trading partner, fell 33.4%.

Sanjay Mehrotra, chief executive of Samsung Electronics' rival Micron Technology, said last week that he was optimistic about the market's recovery this year as inventory levels have fallen and demand has gradually recovered. Still, the key to recovery will depend on whether big chipmakers cut production. "If supply is reduced further, the recovery could accelerate," he said.

Samsung has been reluctant to cut production. Although Micron, SK Hynix and Kioxia have all reduced investment spending and production, hoping to curb further price declines, Samsung, the industry leader, is still increasing spending.

Although competitors and investors have called on Samsung to follow its competitors to cut production, Samsung seems to be reluctant. In February, Lee told Samsung executives that they should not be swayed by industry challenges and should continue to invest in the future.

Lansheng Technology Limited is a global distributor of electronic components that has been established for more than 10 years, headquartered in Shenzhen China, who mainly focuses on electronic spot stocks.

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