People walk past the Samsung logo displayed on a glass door at the corporate’s Seocho constructing in Seoul on Oct. 27, 2022.
Jung Yeon-je | AFP | Getty Images
Samsung Electronics flagged on Friday its quarterly profit tumbled to an eight-year low as a weakening global economy hammered memory chip prices and curbed demand for electronic devices.
Profits on the world’s largest memory chip, smartphone and TV maker are expected to shrink again in the present quarter, analysts said, after Samsung announced its October-December operating profit likely fell 69% to 4.3 trillion won ($3.37 billion) from 13.87 trillion won a 12 months earlier.
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It was Samsung’s smallest quarterly profit for the reason that third quarter of 2014 and fell in need of a 5.9 trillion won Refinitiv SmartEstimate, which is weighted toward forecasts from analysts who’re more consistently accurate.
“All of Samsung’s businesses had a tough time, but chips and mobile especially,” said Lee Min-hee, analyst at BNK Investment & Securities.
Quarterly revenue likely fell 9% from the identical period a 12 months earlier to 70 trillion won, Samsung said in a brief preliminary earnings release. Asia’s fourth-biggest listed company by market value is attributable to release detailed earnings later this month.
Rising global rates of interest and price of living have dampened demand for smartphones and other devices that Samsung makes and in addition for the semiconductors it supplies to rivals including Apple.
“For the memory business, the decline in fourth-quarter demand was greater than expected as customers adjusted inventories of their effort to further tighten funds…,” Samsung said within the statement.
Its mobile business’ profit declined within the fourth quarter as smartphone sales and revenue decreased attributable to weak demand resulting from prolonged macroeconomic issues, Samsung added.
“Memory chip prices fell within the mid-20% through the quarter, and high-end phones resembling foldable didn’t sell as well,” said BNK Investment’s Lee.
Three analysts said they expected Samsung’s profits to dive again in the present quarter, with a probable operating loss for the chips business as a glut drives an extra drop in memory chip prices.
Samsung shares rose 0.3% in Friday morning trade, underperforming a 0.6% rise in the broader market. Shares of rival memory chip maker SK Hynix rose 1%.
“The rationale shares are rising despite the poor earnings result’s.. investors are hoping Samsung will need to cut back production, like Micron or SK Hynix said they might, which might help the memory industry overall,” said Eo Kyu-jin, an analyst at DB Financial Investment.
Samsung had said in October that it didn’t expect much change to its 2023 investments. Analysts said that Samsung has a history of not announcing production cuts in memory chips, but could organically adjust investment by delaying bringing in equipment or through other ways.
