Samsung Electronics Co Ltd (005930. KS) announced on Friday that it would slash chip manufacturing “meaningfully” in response to a worldwide semiconductor demand slump that has driven prices down.

After reporting a 96% drop in first-quarter profit, Samsung halted output without warning.

Investors ignored the earnings loss, thinking the industry leader’s move would boost chip prices, which had plunged 70% in nine months.

SK Hynix Inc. (000660. KS) rose 5.6% and Samsung 4.5% in early trade, the highest one-day advance since September.

Smartphone and PC companies stockpiled chips during the epidemic, but buyers bought less as inflation rose.

Samsung claimed memory demand has plummeted due to a sluggish global economy and consumers focusing on using up their supplies.

“We are cutting the manufacture of memory chips by a considerable amount, especially those of goods with supply assured,” it said.

Samsung did not specify the magnitude of the production cut. Still, it sent a strong signal for a business that had previously claimed it would make tiny changes like pauses for repairing manufacturing lines but not a full-blown cut.

“The No. 1 market share firm is joining production reduction increased shares… SK Hynix and Micron (MU.O) had disclosed production cuts, but only Samsung had not, so the market was watching for it,” said Daishin Securities analyst John Park.

Today’s production decrease signals a second-half memory chip comeback.

Samsung said it invested in infrastructure and research to ensure clean rooms for chip fabrication and maintain its technological superiority despite decreasing production.

Having previously announced capital spending equivalent to 2022’s 53.1 trillion won, it did not disclose how its 2023 investment plans would be affected.

In October, SK Hynix stated it would have more than half its capital spending in 2023 compared to 2022, and Micron lowered fiscal 2023 investment expectations by more than 30% in September.

In a quick earnings release, Samsung calculated its January-March operating profit decreased to 600 billion won ($455.5 million) from 14.12 trillion won a year earlier. It was the lowest quarterly profit in 14 years.

The first-quarter earnings missed the 873 billion won Refinitiv SmartEstimate, weighted toward more accurate analysts. As a result, many estimates were lowered this week.

According to an average of expert projections, Samsung’s semiconductor division would report a record loss of 2.1 trillion ($1.6 billion) and another 2 trillion won in the current quarter. The chip sector generated roughly half of Samsung’s earnings in better years.

Experts said Samsung’s production decrease might boost its performance in the current quarter and help memory chip prices recover.

Greg Roh, Hyundai Motor Securities’ head of research, said that Samsung’s output cuts show the seriousness of the crisis.

Later this month, the corporation will report division-specific earnings.