Chip performance remained sluggish in the second quarter, with Samsung and SK Hynix announcing that they would continue to reduce production.

CTOnews.com, July 27 (Reuters)-Samsung Electronics said today that the worst in the global memory chip market is over, but it still plans to extend production cuts because the recovery in demand is largely limited by high-end chips used in artificial intelligence.

▲ Tu Yuan Pexels's move highlights an unprecedented downturn in semiconductors, which led to a record operating loss of 8.9 trillion won (CTOnews.com Note: about 49.929 billion yuan) in Samsung's chip business in the first six months of this year.

"production cuts across the industry are likely to continue in the second half of the year and demand is expected to recover gradually as customers continue to reduce [chip] inventory," Samsung said in a statement. "

Jaejune Kim, executive vice president of Samsung's memory business, said on the earnings call that Samsung would extend the production cuts and make additional production adjustments to some products, including NAND flash chips. He did not disclose the exact extent of Samsung's production cuts, but pointed out that the company's storage chipset was declining rapidly after peaking in May.

Similarly, SK Hynix said yesterday that it would cut NAND production by a further 5 per cent by 10 per cent. LeeMin-hee, an analyst at BNK Investment Securities, said: "NAND is SK's weakness, with a quarterly loss of nearly 2 trillion won (currently about 11.22 billion yuan). More capacity cuts may stabilize the price of NAND, which is good news for Hynix."

The decisions of Samsung and SK Hynix also allayed concerns about a chip glut and boosted Samsung shares by 2 per cent, while SK Hynix shares rose 9 per cent to their highest level since March 2022.