Samsung Electronics says it has had another bad quarter preliminary estimates. This time it warns that quarter-over-quarter operating profit is down 96 percent compared to the same period last year, worse than the two-thirds plunge it suffered the three months before. Not even strong sales of the new Galaxy S23 series could overcome a global drop in chip demand.
Demand for semiconductors has declined since the peak of covid-19 when everyone was spending money on lockdown toys and tools. Now the global economic slowdown has made consumers think twice about buying that next gadget, resulting in swollen chip inventories for companies like Samsung. And according to my ECON101 professor, if there is more supply than demand, prices will fall, hurting corporate profits. And you can’t get a pardon for that.
But don’t feel too bad for Samsung. It still brought in tons of money. Operating profit is estimated at 600 billion won (about $456 million) — the lowest in 14 years, reports the Financial times. It’s just not the staggering 14.12 trillion Korean won (about $10.7 billion) that was raked in around this time last year.
As a result, Samsung says it is reducing memory chip production to a “meaningful level” to address the oversupply. “We have reduced production plans for the short term, but as we expect solid demand for the medium to long term, we will continue to invest in infrastructure to secure essential cleanrooms and to expand R&D investments to maintain technology leadership. to strengthen,” Samsung said in a press release. a statement.
A bright spot for the quarter was the new Galaxy S23 series, which sold around 11 million units. That is 50 percent more than its predecessor, according to analyst Kim Kwangjin of Hanwha Investment & Securities. indicated by Bloomberg.
Samsung will publish its final financial statement in a few weeks, but it usually deviates little or not at all from the preliminary guidance.
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