The worst in 14 years .. “Samsung” profits fell 86% during Q1‎

Samsung Electronics Co. reported Thursday its worst quarterly profit in 14 years, as global economic woes dented demand for consumer electronics and a flood of chips hurt its core business.

According to the Korean Yonhap Agency, the world’s largest manufacturer of memory chips and smartphones announced an operating profit of 640.2 billion won ($ 478 million) during the January-March period, down 95 percent from 14.12 trillion won recorded a year ago.

Its net income in the first quarter came to 1.57 trillion won, down 86.1 percent from a year earlier. Sales fell 18 percent to 63.74 trillion won

Samsung’s Hardware Solutions (DS) division, which oversees the chip business, posted a deficit of 4.58 trillion won, its first financial loss in 14 years, as chip stocks grew sharply amid lower global demand.

The last time Samsung saw its core unit incur losses was in the first quarter of 2009, when the world was emerging from the 2008 financial crisis.

Earlier this month, Samsung said it would reduce memory production “to a meaningful level,” departing from its previous position that it would not artificially reduce production in order to gain more market share.

Smaller rivals such as SK Hynix and Micron moved in several months earlier than Samsung and cut back on production in order to relieve a severe oversupply that was driving down prices.

TrendForce, a market-tracking agency, said early this year that it would take “several quarters of inventory adjustments” and “larger production cuts” by major chipmakers to digest the oversupply that has plagued the industry, and to get out of the downturn.

Samsung expected the global chip market to shrink by 6% year-on-year to $563 billion this year and warned of continued difficult conditions throughout the year.