South Korean tech giant says it will make ‘meaningful’ cuts to chip production amid global economic slowdown.

The South Korean tech giant said on Friday that it expects first-quarter operating profits to dive by more than 96 percent amid declining memory chip sales worldwide.

Samsung’s profits in January-March are expected to decline to 600 billion won ($455m), a 14-year low, the company said in a regulatory filing, pointing to “continuing weak demand for IT products that have aggravated the performances of all sectors”.

Samsung, South Korea’s largest conglomerate, did not specify by how much it would scale back production but said the cut would be “meaningful”.

“We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured,” the company said in a statement.

The announcement is the latest sign that deteriorating global economic conditions are hitting South Korean chipmakers such as Samsung and SK Hynix, which have enjoyed years of record-breaking profits on the back of furious chip demand.

Samsung saw profits fall by nearly 70 percent in the final quarter of 2022, which was blamed on headwinds including Russia’s war in Ukraine and high inflation.

Samsung Group is the biggest of the family-run conglomerates that hold significant over South Korea’s economy, accounting for roughly one-fifth of gross domestic product (GDP).