Samsung flags further chip slowdown after booking 8-year-low profit
Technology
Samsung flags further chip slowdown after booking 8-year-low profit
SEOUL (Reuters) - Samsung Electronics Co Ltd (005930.KS) on Tuesday reported its lowest quarterly profit since 2014 and said persistent macroeconomic uncertainty will make for a tough first half year, though demand is likely to start recovering in the second half.
Sluggish demand and inventory adjustment will continue to impact the chip business in the first quarter, Samsung said in a statement, adding it expects "smartphone demand to decline year-on-year due to the economic slowdown in major regions".
The world s biggest maker of memory chips and smartphones reported a 69% plunge in fourth-quarter profit, as consumer demand for electronic devices dropped while clients spent less in a weak economy, dragging down memory chip prices.
At 4.3 trillion won ($3.49 billion), October-December operating profit was Samsung s lowest quarterly profit in eight years. Revenue fell 8% to 70.5 trillion won.
With memory chip prices falling by double-digit percentages in 2022, Samsung s chip profit likewise tumbled - to about 270 billion won in the fourth quarter from 8.83 trillion won in the same period a year prior, marking the lowest since a 2011 change in accounting standards, Samsung s website showed.
Some analysts expect the chip business to book a loss in the first quarter, pulling overall profit below that of the fourth.
Last week, chipmaker Intel Corp (INTC.O) said it expects to lose money in the current quarter as the personal computer industry experiences a chip glut.
Memory chip rivals Micron Technology Inc (MU.O) and SK Hynix Inc (000660.KS) had already said they would slash investment in 2023.
Investors will be watching for whether Samsung avoids mentioning a direct chip production cut - as is its usual stance - or rather gives a clear signal of production cuts given the severity of the memory chip down-cycle.
In mobile, Samsung said fourth-quarter profit fell to 1.7 trillion won from 2.66 trillion won a year earlier, as a decline in low- and mid-end smartphone sales was greater than expected due to "continued inflation and geopolitical instability."
Samsung plans to unveil its latest Galaxy S flagship smartphones later this week.
Shares in Samsung fell 2.1% in morning trade, versus a 0.2% drop in wider market (.KS11).
