Electronics: Samsung with significantly lower operating profit

Samsung with significantly lower operating profit

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Declining demand, falling prices and a sluggish consumer mood: The electronics group Samsung is also struggling with the consequences of global downward trends.

Electronics giant Samsung clearly felt the weakness of the global economy in the fourth quarter of 2022. Profit from ordinary operations fell 69 percent year-on-year to 4.3 trillion won, the South Korean market-leading maker of memory chips and smartphones said on Tuesday. It was the lowest operating profit for Samsung Electronics in eight years. In the smartphone business, demand continued to be sluggish, and the prices for memory chips fell.

The bottom line, however, is that Samsung posted a surplus of 23.84 trillion won in the fourth quarter, more than double the year before. Revenue fell 8 percent to 70.46 trillion won.

Amid the global economic slowdown, the business environment deteriorated significantly in the fourth quarter due to weak demand, the company said in a statement. The forecast for 2023 was therefore cautiously optimistic: “While macroeconomic uncertainties are expected to persist, the company expects demand to start recovering in the second half.”

Profit slump in the semiconductor division

According to Samsung, the demand for memory chips fell overall because customers continued to switch their inventories. This is also related to the external uncertainties. Operating profit of Samsung’s semiconductor division alone fell 97 percent in the fourth quarter, from 8.84 trillion won a year earlier to just 0.27 trillion won.

In view of an impending recession, the semiconductor industry had already expected weaker memory demand in the second half of the year. High inflation dampened consumer sentiment, which also weighed on chip producers.

According to Samsung, in the field of mobile devices including smartphones, the market for mass products in particular shrank more than expected due to inflation. The effect of newly introduced devices has also weakened. In terms of sales, on the other hand, flagship models have held up relative to market forecasts.

For the full year 2022, Samsung posted an all-time high in sales of 302.23 trillion won (226 billion euros). The surplus grew nearly 40 percent to 55.65 trillion won.


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