Anchor: Samsung Electronics' estimated operating profit for the first quarter hit a 14-year low of 600 billion won, an earnings shock lagging far behind market estimates that topped 700 billion won. Amid a protracted downturn in the semiconductor industry, the tech giant has, for the first time, announced plans to forcibly slash its memory chip output.
Choi You Sun reports.

Report: Samsung Electronics on Friday released dismal figures, estimating an operating profit of 600 billion won, or around 454-point-nine million U.S. dollars, in the first quarter, down 95-point-75 percent from a year ago.

It is the first time in 14 years that the world-leading memory chip and smartphone maker recorded an operating profit of less than one trillion won. Sales in the January-to-March period also fell 19 percent on-year to 63 trillion won.

Samsung's estimate is lower than the average operating profit of 720 billion won projected earlier by 18 domestic securities firms, which still constituted a 94-point-nine-percent drop from last year.

In a statement, the company blamed sluggish IT demand and customers' inventory adjustment for its discouraging performance.

While Samsung did not release the results of each business division, the projected deficit incurred by  its Device Solution(DS) division, which oversees its chip operations, stood at four trillion won, its first financial loss in 14 years.

This was likely due to an expanding surplus in chip inventory in the wake of tapering global demand.

The tech giant, which had previously opposed a forcible reduction of its output, announced that it is adjusting its capacity to a "meaningful level" for products for which it has secured enough inventory to deal with future demand.

Despite the short-term output adjustment, Samsung said it plans to continue investments in infrastructure and R&D to strengthen its technology leadership with solid demand forecast for the mid to long term.
Choi You Sun, KBS World Radio News.