SEOUL: Samsung Electronics, on Friday, said that it expected first-quarter operating profits to plunge over 95 per cent on-year to a 14-year low, as memory chip sales were hammered by a global downturn.
The South Korean tech giant said in a regulatory filing that January-March operating profits were expected to drop 95.7 per cent to 600 billion won (USD 455 million), their lowest level since the first quarter of 2009.
The firm is the world's largest smartphone maker and the flagship subsidiary of Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy.
The anticipated drop in profits was due to "continuing weak demand for IT products that have aggravated the performances of all sectors", Samsung said in a statement.
"We are cutting memory chips production to a meaningful level", Samsung added, saying the company had "stockpiled enough supplies of certain memory chips products to meet changing market demand down the road".
Korean chipmakers -- led by Samsung -- have enjoyed record profits in recent years as prices for their products soared, but the global economic slowdown has dealt a blow to memory chip sales.
But the recent drop in profits has not deterred Samsung from making bold investments -- in March, it unveiled plans to contribute USD 227 billion over the next two decades to building the world's largest chip centre in Yongin, south of Seoul.
The plan is part of the South Korean government's drive to invest heavily in six key technologies, including chips, displays and batteries -- all areas where the country's tech giants are already well-established.
The company is expected to release its final earnings report at the end of this month.