Samsung Electronics anticipates another dismal quarter. This time, it’s warning that quarterly operational profit fell 96% compared to the previous year, worse than the two-thirds drop three months earlier. Chip demand fell worldwide, even with strong Galaxy S23 sales.
Since the peak covid, everyone has bought lockdown toys and tools, reducing semiconductor demand. In addition, Samsung’s semiconductor inventory has grown as people rethink buying new gadgets due to the global economic recession. My ECON101 lecturer says prices fall when supply exceeds demand, hurting corporate earnings. No pardon.
Samsung shouldn’t feel awful. It made a fortune. The Financial Times they have reported a 14-year low operating profit of 600 billion won (approximately $456 million). It’s still much behind last year’s 14.12 trillion Korean won ($10.7 billion).
Samsung is reducing memory chip manufacturing to a “meaningful level” to reduce excess. “We have curtailed short-term production plans, but since we foresee robust demand for the mid-to-long term, we will continue to invest in infrastructure to secure necessary cleanrooms and to boost R&D spending to strengthen tech leadership,” Samsung stated.
The Galaxy S23 series sold 11 million devices in the quarter. Hanwha Investment & Securities analyst Kim Kwangjin told Bloomberg it was 50% higher than its predecessor.
In a few weeks, Samsung will release its final financial statement, which seldom deviates from prior projections.