Samsung’s Q1 Performance Report For 2023 Shows 95% Drop In Profits As Price And Demand For Memory Chips Remains Weak

2023 has clearly not been the best start for leading South Korean tech giant Samsung as displayed in its recent performance report.

The company’s operating profit figures went down during Q1 as the pricing and demand for memory chips continued to face a decline. Therefore, the figures noted were the lowest ever witnessed in a long time, accounting for a plunge of nearly 95% in terms of profits.

As far as figures for revenue are concerned, there was an 18% decline YoY which stood at $47.6 billion. While it might be on par with its own targets, it’s much less than what was forecasted by expert analysts as per estimates from Refinitv.

Coming down to operating profit, that figure stood at nearly $478 million and was down from the previous year’s 14.1 trillion Korean Won. They did however mention through a guidance that was published earlier how they would be seeing this mega loss in Q1’s profit figures. And when you come to think of it, it’s the firm’s lowest profit operating figure since the start of 2009.

But what does the future hold for the electronics giant? Well, for those who may not be aware, the firm makes the majority of its profits from the likes of its semiconductor division, and that entails the sales of memory chips. This goes into everything ranging from the likes of PCs to phones and even servers that you’ll find scattered across data centers.

The firm put out a massive 4.5 Korean won decline in this leading sector for business against the profit of 8.4 trillion Korean Won that was made during the same time in 2022.

At the start of the pandemic, we saw the tech giant increase stocks of chips as there was increased demand for them by consumers and now, it’s being forced to deal with a huge excess of inventories because consumers are cutting back on making purchases of such products, thanks to the increase in inflation. This has resulted in the decline of prices for such chips that the manufacturer produces.

This South Korean giant mentioned in the month how it would be making it a meaningful affair by reducing the production of memory chips. This is after it took on the lead of small-scale competition like Micron as well as SK Hynix.

The disappointing figure was set out by the tech giant but at the same time, they did mention how there would be a meaningful cut in manufacturing during this same period, thanks to the downturn in memory chips. But the news was not taken too negatively. It was taken as a positive stance. But the company is yet to set out a forecast of recovery after this disaster spills out for the next half of 2023.

But Samsung does hope to slowly and steadily recover in this 2H as projections for customer inventory figures witness a decline.

The tech giant says it does expect demand recovery to occur but to very limited figures as big data centers begin to invest using a more conservative approach. Similarly, we’re seeing clients continue to adjust the inventories too.

On the other hand, the tech giant is expecting launches for smartphones to occur as well as promotions for PCs and an expansion regarding CPU adoption for a boost in demand for memory chips.

We similarly saw its archrival SK Hynix set out a recovery pitch in this sector after it reported a quarterly loss last yesterday. This was accompanied by positive statements speaking of rebounds that are most likely to be driven by cuts in production and a little demand for restocking.

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