first quarter profit drops by 86% – Corriere.it

Samsung Electronics reports its worst quarterly profits in 14 years, discounting slowdown in consumer spending on electronics and a global glut of microchips hitting its core memory business. The South Korean giant, world leader in memory chips and smartphones, announced an operating profit that fell to 640 billion won (-95.5% annually), equal to approximately 480 million dollars. Net profit stood at 1,570 billion (-86.1%) and sales at 63,750 billion (-18.1%). The group said in a statement that total consumer spending paid for the uncertain global macroeconomic environment.

A loss of 4,600 billion

The major semiconductor business reported an operating loss of 4.6 trillion ($3.4 billion) from a profit of 8.5 trillion in the first quarter of 2022. Declining demand, linked to weak global economic growth and consumer confidence, has affected other major players in the sector including the South Korean SK Hynix and the American Micron. Underscoring the difficulties, revenues in the semiconductor industry fell 49% year over year to $13.7 trillion. Samsung admitted that it expects the current difficult market conditions to persist, focusing on increased technological competitiveness and demand for high-end products.

Reduction of chip production

Memory chips, both DRAM and NAND flash, are used in a wide variety of products and equipment, from personal computers and smartphones to database servers. But the industry’s heavy reliance on consumer products causes major management and performance swings. Despite the problems of the semiconductor sector, Samsung managed to stay profitable thanks to the sales of smartphones, displays and appliances. Samsung’s business division that includes smartphones reported $3.9 trillion in operating profit. Analysts noted that while Samsung is reducing production of simple DRAM and NAND chips, it will likely ramp up more advanced memory semiconductors to meet demand in the high-end market. Samsung shares, with quarterly data substantially in line with market expectations, lost around 0.3% on the Seoul Stock Exchange.