Samsung’s 1Q Profit Dropped 95% due to Sluggish Memory Chip Demand

South Korean electronics giant Samsung on Thursday reported its worst quarterly profits in 14 years, as prices for its memory chips continued to fall and demand remained weak.

In a statement, Samsung, one of the world’s largest manufacturers of memory chips and smartphones, revealed that its operating profit decreased by 640 billion won ($478,6 million), or 95%, compared to the previous year.

The corporation had a decline in both profits and sales in the first quarter, with profits falling 86.1% to 1.57 trillion won and sales dropping 18% to 63.75 trillion won.

The global slowdown in semiconductor purchases amid an economic slowdown and sluggish consumer spending was cited as a factor for the first quarter’s steep drop in chip prices, which in turn led to production cuts across the industry.

This is the company’s lowest operating profit since the first quarter of 2009.

Earlier this month, after predicting a huge reduction in profits, Samsung announced it would begin cutting memory chip production by a “meaningful” amount, following the path of smaller competitors like SK Hynix and Micron.