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Worst Profit in The First Quarter Forces Samsung to Cut Back Memory Chip Production

The company’s quarterly operating profit decreased by 96 percent compared to the same period last year, worse than the two-thirds decline it suffered three months prior

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Giant Electronics company Samsung has revealed plans to cut back memory chip production following the decline in the company’s key metrics in the first quarter (Q1) of 2023.

The company’s quarterly operating profit decreased by 96 percent compared to the same period last year, worse than the two-thirds decline it suffered three months prior. Reports reveal that this is the lowest profit ever recorded by Samsung since the first quarter (Q1) in 2009.

Samsung said in a statement, “We have cut short-term production plans, but as we project solid demand for the mid-to-long term, we will continue to invest in infrastructure to secure essential cleanrooms and to expand R&D investment to solidify tech leadership”.

The company further added that it will continue to invest in infrastructure, research and development to strengthen its tech leadership in the industry.

Samsung’s decision to cut down on memory chip production sent the company’s stock up 4.7%, its biggest intraday jump in three months. The company, therefore, disclosed that it would cut memory chip production to a meaningful level, as it seeks to optimize line operations to ensure there is adequate memory chip volume for future demand.

While Samsung plans to release its full financial statement and net income later this month, analysts at Bloomberg expect the company to post 1.4 trillion won quarterly profit for the first quarter (Q1) also predicting its revenue to drop to 63 trillion won in the same quarter from 77.78 trillion last year.

Samsung is not the only company that has cut its memory chip investment following the decline in demand, its competitors such as Kioxia, SK Hynix, and Micron Technology have all slashed their memory chip production to counter oversupply.

Meanwhile, on the positive side of the quarter for the company, it globally launched the latest series of its mobile phone, the Galaxy S23 series which recorded sales of about 11 million units, with numbers more than double that of the Galaxy S21 series within the first week.

The series surpassed the 1 million mark in South Korea in a similar timeframe to the Galaxy S22 series. Investors King understands that Samsung will celebrate the 1 million sales mark in South Korea with bonuses for buyers, KRW 100,000 vouchers or damage compensation.

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Starlink Pulls Plug on Ghana, South Africa, and Others

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Starlink, the satellite internet service operated by SpaceX, has announced the cessation of services in countries including Ghana and South Africa.

This decision comes as a significant blow to users who have come to rely on Starlink for their internet connectivity needs.

The decision, set to take effect by the end of April 2024, will disconnect all individuals and businesses in unauthorized locations across Africa, including Ghana, South Africa, Botswana, and Zimbabwe.

While subscribers in authorized countries such as Nigeria, Mozambique, Mauritius, and others can continue to use their kits without interruption, those in affected regions face imminent loss of access.

One of the reasons cited by Starlink for the discontinuation is the violation of its terms and conditions.

The company explained that its regional and global roaming plans were intended for temporary use by travelers and those in transit, not for permanent use in unauthorized areas. Users found in breach of these conditions face the termination of their service.

Furthermore, Starlink’s recent email to subscribers outlined stringent measures to enforce compliance.

Subscribers who use the roaming plan for more than two months outside authorized locations must either return home or update their account country to the current one. Failure to do so will result in limited service access.

The decision to discontinue services in certain countries raises questions about the future of internet connectivity in these regions.

Also, concerns have been raised about Starlink’s ability to enforce the new rules effectively. Reports indicate that the company has previously failed to enforce similar conditions for over a year, raising doubts about the efficacy of the current measures.

Starlink’s decision to pull the plug on Ghana, South Africa, and other nations underscores the complexities of providing satellite internet services in diverse regulatory environments.

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Nigeria’s Broadband Penetration Stalls at 42.53% Amid Connectivity Challenges

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Nigeria’s broadband penetration has stalled at 42.53% as of January, according to the latest report.

Subscriptions currently stand at 92.19 million, indicating a significant gap in connectivity, particularly in rural areas.

The Nigerian National Broadband Plan 2020-2025 aims to increase broadband penetration to 70% by 2025, with the ultimate goal of achieving 96% mobile broadband coverage by 2030.

However, this ambitious target requires substantial investment—approximately $461 million, according to a recent report by the Global System for Mobile Communications Association (GSMA).

While the country’s major telecommunications companies, such as MTN Nigeria and Airtel Africa, have invested heavily in expanding their network infrastructure, much of this development has been concentrated in urban areas. Rural and underserved regions face a significant coverage gap, exacerbating the digital divide.

Despite these challenges, Nigeria has made progress in improving its broadband infrastructure. Since 2012, the mobile broadband coverage gap across Africa has decreased from 56% to 13% in 2022, due to significant investments in network capacity and new technologies.

Nonetheless, millions of Nigerians, particularly those in rural regions, remain without access to essential telecom services.

To address this issue, Nigeria’s government established the Universal Service Provision Fund (USPF) in 2006, aimed at bridging the connectivity gap and expanding broadband access to unserved and underserved areas.

The fund provides resources for deploying telecommunications infrastructure in economically unviable regions.

The success of these initiatives, along with increased investments in broadband infrastructure and policies to incentivize internet expansion in remote areas, will be crucial in closing the connectivity gap and improving digital access for all Nigerians.

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iPhone Shipments Drop Amid Resurgence of Android Rivals

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Apple Inc. reported a significant drop in iPhone shipments during the March quarter, reflecting a downturn in sales across China amid the resurgence of competition from Android-powered rivals.

According to market tracker IDC, the tech giant shipped 50.1 million iPhones in the first three months of the year, a 9.6% year-on-year decline that fell short of the average analyst estimate of 51.7 million.

The steep decrease in iPhone sales marks Apple’s most significant quarterly dip since 2022, when Covid-19 lockdowns disrupted supply chains.

This time, the Cupertino-based company faces challenges from resurgent competitors such as Huawei Technologies Co. and Xiaomi Corp.

These firms have rebounded strongly in recent quarters, and their innovative product lines have begun to reclaim market share from Apple in China.

Samsung Electronics Co. regained its position as the top smartphone supplier globally, while Apple ranked second. Xiaomi closed the gap on Apple, shipping 40.8 million units, an impressive 33.8% increase year-on-year.

Transsion Holdings, another key player in the budget smartphone segment, nearly doubled its shipments, showcasing the competitive environment Apple faces.

Nabila Popal, research director at IDC, highlighted the broader shift in the smartphone market, which has recovered from the supply chain disruptions and challenges of recent years.

“While Apple has demonstrated resilience and growth in recent years, maintaining its pace and share in the market may prove challenging as Android manufacturers make strides,” Popal commented.

Apple has a strong brand and loyal customer base, yet its market position may be tested further by the aggressive pricing and innovative products offered by Chinese rivals.

The company’s efforts to sustain its premium pricing strategy may also be challenged as more customers consider switching to Android alternatives.

As the tech industry looks ahead to the rest of the year, Apple’s upcoming earnings report and strategic moves to address this competitive pressure will be closely watched by investors and industry observers alike.

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