Samsung posts worst quarterly profits in 14 years from chip downturn

Samsung stated on Friday in its earnings steerage that it recorded 63 trillion received in income and 600 billion received in working revenue for the primary quarter of 2023.

Working revenue nosedived by 96% year-on-year and is the South Korean tech large’s lowest revenue determine in 14 years for the reason that first quarter of 2009 in the course of the world monetary disaster. Income additionally dropped by 19% from a yr in the past.

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South Korean analysts anticipate Samsung’s chip enterprise to have posted heavy losses of billions of {dollars} in the course of the first three months of the yr. Different reminiscence chipmakers Micron and SK Hynix have additionally recorded heavy losses of their newest quarters.

In an announcement on Friday, Samsung stated the macro scenario and slowdown of shopper demand induced the drop in reminiscence chips from the earlier quarter. The tech large additionally stated earnings from logic chips and show panels additionally dropped over the identical time interval. 

The downturn within the chip market began final yr in the course of the second half however up to now solely worsened as chipmakers have warned early this yr that the scenario was worst than they anticipated they usually have been reducing their chip manufacturing output — an especially uncommon transfer that displays how dire the scenario is.

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On Friday, Samsung additionally confirmed that it was decreasing its chip manufacturing output for the “brief time period” but additionally added that it expects demand for chips to be strong in the long run. 

Regardless of the plunge in total working revenue, Samsung’s cellular enterprise is predicted to have carried out strongly in the course of the first quarter because of the launch of the Galaxy S23 Collection.

The South Korean tech large stated on Thursday that the collection was performing higher than the Galaxy S22 throughout all areas of the world for the reason that launch, with the Galaxy S23 Ultra being particularly common and accounting for 60% of gross sales.

Analysts anticipate the downturn of the chip market to proceed for at the least as much as the second quarter of this yr when Samsung’s chip enterprise is once more anticipated to file losses.

Samsung is predicted to announce its full earnings on the finish of the month.