Samsung earns significantly less due to weaker chip demand
The weakening global economy has clearly left its mark on the South Korean electronics group Samsung. It is the first time in eight years that profit from ordinary activities has plunged below five trillion won in a quarter.
Operating profit in the fourth quarter of 2022 likely fell 69 percent year-on-year to 4.3 trillion won (about 3.2 billion euros), the market-leading smartphone and memory chip maker said in its earnings outlook on Friday.
In terms of sales, Samsung expects an 8.6 percent decline to about 70 trillion won (52.6 billion euros). Against the backdrop of external uncertainties, the company reported a "significant slump in memory business due to sluggish demand," it said. It also said sales of smartphones were weaker.
Figures published earlier to mitigate confusion
Traditionally, Samsung does not present precise business figures until a later date. But apart from that, the company said it was forced to disclose the reasons for the decline this time in order to "minimize confusion in the market and increase investor understanding" before the actual results are published at the end of January. The preliminary results had been clearly below market expectations.
The lower demand for the company's memory chips had also been greater than expected. Customers had reduced their inventories in order to save money. They were concerned about the weakening consumer sentiment in the face of high interest rates and the weak economic outlook. As a result, prices have also fallen.
