Samsung Electronics Co Ltd. of South Korea said on Tuesday that it has no plans to reduce its investment in semiconductors this year, despite the fact that the industry is experiencing its worst slowdown in more than a decade due to a weak global economy.

The guidance defies a general industry tendency to cut back on expenditure and output, fueling worries that the biggest memory chip manufacturer in the world intends to use its vast coffers and higher profit margins to take market share away from less powerful competitors.

“Samsung might be seeing this time as a good opportunity to increase market share, which should help it in the long term, at the expense of SK Hynix and Micron,” said analyst Choi Yoo-june at Shinhan Securities.

In the second half of the year, Greg Roh, head of research at Hyundai Motor Securities, predicted that Samsung Electronics’ market share might increase from roughly 43% and 32% to the upper 40% level for DRAM chips and the mid-30% range for NAND flash memory chips, respectively.

Samsung signalled it would reduce short-term output organically through line maintenance, equipment modification, and switching to cutting-edge chipmaking methods rather than reducing investment in reaction to decreasing demand and declining prices. Additionally, it declared that it will boost the percentage of capital expenditures allocated to research and development.

“Samsung, in a roundabout way, is saying production will decrease slightly,” said analyst Kim Yang-jae at Daol Investment and Securities. “However, investors were hoping for a stronger production cut, or a comment about faster market rebound – so its shares fell.”

On Tuesday, the stock prices of Samsung and its neighbour SK Hynix Inc decreased by 3.0% and 2.2%, respectively.

SK Hynix and Micron Technology Inc. have declared they will reduce investment, in contrast to Samsung, which stated that capital spending in 2023 will be similar to 2022. In contract chipmaking, bigger rival Taiwan Semiconductor Manufacturing Co Ltd has also announced a spending cut.

Since late last year, the global technology sector has struggled with a sudden and dramatic decline in demand as businesses cut spending on digital goods and services and individuals cut down on discretionary purchases in the face of rising inflation.

Samsung earlier on Tuesday posted its lowest quarterly profit since 2014 and predicted a challenging first half of the year despite anticipating a recovery in demand in the second half.

The chip industry will continue to be impacted by poor demand and inventory adjustments in the first quarter, while demand for smartphones is expected to decrease year over year owing to the global economic slowdown, according to Samsung.

The operational profit for the three months ending in December was the lowest for Samsung in eight years, coming in at 4.3 trillion won ($3.49 billion). To 70.5 trillion won, revenue dropped 8%.

Samsung’s semiconductor profit dropped to roughly 270 billion won in the fourth quarter from 8.83 trillion won a year earlier, marking the lowest since the first quarter of 2009 as memory chip prices fell by double-digit percentages in 2022.

According to some estimates, the semiconductor industry will report a loss in the first quarter, bringing the overall profit down from the fourth.

The personal computer market is experiencing a chip oversupply, and chipmaker Intel Corp. stated last week that it anticipates losing money in the current quarter.

Samsung reported that its mobile division’s fourth-quarter profit decreased to 1.7 trillion won from 2.66 trillion won a year earlier due to a greater-than-anticipated reduction in sales of low- and mid-end smartphones.

Later this week, Samsung intends to introduce its newest Galaxy S flagship models.

(Adapted from USNews.com)