November 26, 2024

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Samsung Electronics CEO Kyung Kye-hyun (right), in charge of the tech giant’s Device Solutions Division, speaks with Minister of Economy and Finance Choo Kyung-ho as they participate an event held at Samsung's Pyeongtaek campus, Gyeonggi Province, on April 7. (Yonhap)

Samsung Electronics, which recently recorded its worst operating profit in the first quarter, is expected to increase its spending to raise wafer input for research and development, according to industry sources on Monday.

Kyung Kye-hyun, the CEO in charge of the tech giant’s Device Solutions Division overseeing global memory operations, System LSI, said the company will increase its wafer input to “gain the upper hand in technology for future products,” speaking at a staff business session on Wednesday.

“We achieved the biggest monthly sale for DRAM and NAND flash, but their price fell too much. To deal with the drastic deterioration of the performance, we will take active measures,” Kyung said.

Samsung, the world’s top memory chipmaker, reported its worst quarterly operating profit in 14 years for the first three months of this year. The company posted 640.2 billion won ($478.5 million) in operating profit, plunging 96.6 percent on-year, as its sales fell by 18.1 percent to 63.75 trillion won. The company's net income hit 1.57 trillion won, dipping 86.1 percent from a year ago.

“The (country’s) economic growth rate is expected to continue to go down. While we may not be able to avoid falling into deficit, we can still reduce it, and that is up to what we do in the remaining seven, eight months (of the year),” the CEO told the staff.

While experiencing a severe industry downturn with slumping demand and falling prices, the tech giant said it will stick to its capital expenditure plan to bolster research and development to gear up for the future.

In the first quarter of the year, the company invested a record 6.58 trillion won in research and development -- over 10 times their operating profit -- and also a record 10.7 trillion won in equipment and facility.

Samsung also made a rare decision to cut its memory production to “a meaningful level,” joining the rivals to cope with the worsening business conditions and to adjust chip inventory.

By Jo He-rim (herim@heraldcorp.com)