Samsung Profit at 6-year low
2023.01.05 08:52
Samsung Profit at 6-year low
Budrigannews.com – (OTC:) Samsung Electronics As a global economic downturn reduces demand for electronic devices and clouded the outlook for the memory chip industry, Co Ltd’s quarterly profit will likely fall by 58% to its lowest level in six years.
According to analysts, smartphone makers and other clients held back orders for memory chips as a result of consumers and businesses cutting back on spending and investment in the face of rising interest rates and high inflation. As a result, smartphones sold for less as demand decreased.
KS: Samsung, as the largest manufacturer of memory chips, smartphones, and televisions in the world, is indicative of global consumption trends. Preliminary results are anticipated to be released on Friday, followed by full results later this month.
According to a Refinitiv SmartEstimate from 21 analysts, Asia’s fourth most valuable listed company’s operating profit likely decreased to 5.9 trillion won (or $4.62 billion) in the October-December period.
With an operating profit of 13.87 trillion won the year before, that would be Samsung’s lowest quarterly profit since the third quarter of 2016.
“A sharp drop in demand is the primary reason for the performance.” According to Hana Financial Investment analyst Kim Roko, “shipments and prices of chips and smartphones are expected to fall short of previous expectations.”
Forecasts from analysts whose accuracy is consistently higher are favored in SmartEstimates.
Seven analyst estimates showed that Samsung’s chip business’ operating profit likely fell 78% to 1.9 trillion won.
Chips typically make up about half of the profits of the tech giant.
According to TrendForce data, prices of some DRAM memory chips, which are used in a lot of smartphones and PCs, fell by 40% over the course of the year, while prices of NAND flash chips, which are used for data storage, fell by 14%.
Micron Technology and SK Hynix, rivals in the memory chip industry in response to the memory downcycle, which is anticipated to last at least until the second half of 2023, have drastically reduced planned investments for 2023.
Analysts, on the other hand, stated that Samsung is anticipated to make use of its substantial resources during this downturn to increase its market share by largely maintaining its investment plans in order to be ready to profit when the market for memory chips eventually recovers.
In October, Samsung stated that it did not anticipate significant changes to its investments for 2023. As of the end of September, it had approximately 128.82 trillion won, or $100.83 billion, in cash.
Profits from Samsung’s mobile business are also expected to decline, with estimates predicting a 14 percent decline to 2.3 trillion won for the quarter.
According to Counterpoint’s estimate, the company shipped 63 million handsets in the quarter, including 62 million smartphones. This is in contrast to the 72 million smartphones that were sold in the fourth quarter of 2021.
In 2022, Samsung shares dropped about 29% before rebounding this week when South Korea announced planned tax breaks for investments in semiconductors. This is in contrast to the Philadelphia Semiconductor index’s decline of 36% the previous year.
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