Samsung Electronics on Thursday said the worst is over for the global memory chip market but announced plans to extend production cuts because a demand recovery is largely constrained to high-end chips used in artificial intelligence.

The move underscores the unprecedented semiconductor downturn that led the South Korean firm to incur a record 8.9 trillion won ($7 billion) operating loss from its bread-and-butter chip business in the first six months of this year.

The business is likely to remain in the red in the current quarter, although the loss is seen almost halving to 2.3 trillion won from the second quarter, according to 22 analysts polled by Refinitiv.

A global economic slowdown and high interest rates have dampened demand for most consumer goods following a pandemic-driven boom.

"Production cuts across the industry are likely to continue in the second half, and demand is expected to gradually recover as clients continue to destock their (chip) inventory," Samsung, the world's biggest memory chip maker, said in a statement.

Jaejune Kim, executive vice president of Samsung's memory business, said on an earnings call that it would extend production cuts and make additional output adjustments for certain products including NAND flash chips, which are used to store digital data.

He did not disclose the extent of Samsung's output cuts but noted the company's memory chip stocks were rapidly decreasing after peaking in May.

The comments eased concerns about chip oversupply and boosted Samsung shares by 2 per cent, while smaller rival SK Hynix's (000660.KS) shares jumped by 9 per cent to the highest level since March 2022.

SK Hynix, which said on Wednesday that it would cut NAND output by a further 5 per cent to 10 per cent, is seen benefiting more from the concerted efforts due to its heavy exposure to those chips.

"SK Hynix's weakness is NAND... and it's reporting a nearly 2 trillion won loss per quarter. More supply cuts could stabilise NAND prices... which would be very good news for Hynix," said Lee Min-hee, an analyst at BNK Investment & Securities.