Samsung Says Q4 Profit Tumbled 69 Percent to Eight-Year Low Amid Weakening Global Economy

Internet

Products You May Like

Samsung Electronics flagged on Friday its quarterly profit tumbled by two-thirds to an eight-year low as a weakening global economy hammered memory chip prices and curbed demand for electronic devices.

The dismal profit estimate by the world’s largest memory chip, smartphone and TV maker – a bellwether for global consumer demand – sets a weak tone for other technology firms’ quarterly results.

Samsung’s profits are expected to shrink again in the current quarter, analysts said, after the South Korean company announced its October-December operating profit likely fell 69 percent to KRW 4.3 trillion won (roughly Rs. 27,980 crore) from KRW 13.87 trillion (roughly Rs. 90,190). a year earlier.

It was Samsung’s smallest quarterly profit since the third quarter of 2014 and fell short of a KRW 5.9 trillion (roughly Rs. 38,370 crore) Refinitiv SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate.

“All of Samsung’s businesses had a hard time, but chips and mobile especially,” said Lee Min-hee, analyst at BNK Investment & Securities.

Quarterly revenue likely fell 9 percent from the same period a year earlier to 70 trillion, Samsung said in a short preliminary earnings statement. Asia’s fourth-biggest listed company by market value will release detailed earnings on January 31.

Rising global interest rates and cost of living have dampened demand for smartphones and other devices that Samsung makes and also for the semiconductors it supplies to rivals such as Apple.

“For the memory business, the decline in fourth-quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances…,” Samsung said in the statement.

Its mobile business’ profit declined in the fourth quarter as smartphone sales and revenue decreased due to weak demand resulting from prolonged macroeconomic issues, Samsung added.

“Memory chip prices fell in the mid-20 percent during the quarter, and high-end phones such as foldable didn’t sell as well,” said BNK Investment’s Lee, adding its display business was hurt due to client Apple’s production delays at the world’s biggest iPhone factory in China during the quarter.

Three analysts said they expected Samsung’s profits to dive again in the current quarter, with a likely operating loss for the chips business as a glut drives a further drop in memory chip prices.

Samsung shares closed 1.4 percent higher on Friday, versus a 1.1 percent rise of the wider market. Shares of rival memory chip maker SK Hynix rose 2.1 percent.

“The reason shares are rising despite the poor earnings result is.. investors are hoping Samsung will need to reduce production, like Micron or SK Hynix said they would, which would help the memory industry overall,” said Eo Kyu-jin, an analyst at DB Financial Investment.

Samsung had said in October that it did not expect much change to its 2023 investments. Analysts said that Samsung has a history of not announcing memory chip production cuts, but could organically adjust investment by delaying bringing in equipment or in other ways.

© Thomson Reuters 2023


Affiliate links may be automatically generated – see our ethics statement for details.

Catch the latest from the Consumer Electronics Show on Gadgets 360, at our CES 2023 hub.

Products You May Like

Articles You May Like

Scientists Uncover Invisible Ambipolar Electric Field Around Earth for First Time, New Study Reveals
A journey inside Epic Systems’ mythical and sprawling campus, a world away from Wall Street
IC 814: The Kandahar Hijack Review: A Thoroughly Researched Series That Points the Finger at the System
Y Chromosome’s Decline: Can Males Survive Without It in the Distant Future?
PS5 Pro Design, Launch Timeline Leaked; New Console Might Come Without Disc Drive

Leave a Reply

Your email address will not be published. Required fields are marked *