Analysts say expected figures from Samsung will reveal a sharp drop in operating profit as the company struggles to sell chips.
Samsung Electronics Co. Ltd. The first quarter is expected to see an unprecedented drop in profit. according to a Reuters PublicationsSamsung will likely suffer its worst profit decline in 14 years as it struggles with excess memory chip production. Samsung is currently unable to sell its memory chips as demand continues to decline.
The general market awaits Samsung’s preliminary first-quarter results this week, with detailed results expected at the end of the month. Speculation suggests that the official figures from Samsung will confirm what are already thought to be difficult times for the multinational conglomerate.
For example, 27 Refinitiv SmartEstimate analysts expect a 92% crash in operating profit to $1.08 trillion. This is the lowest since the 590 billion profit recorded at the end of the first quarter of 2009, according to company figures cited by Reuters. It is also a far cry from the 14.12 trillion operating profit recorded in 2022.
Samsung has recently launched its new flagship smartphone Galaxy S23. Although analysts expect the new products to push their weight in profit, it won’t prevent Samsung’s profits from crashing due to chip surpluses.
Drop in expected figures could spell more problems for chip industry
By 2022, Samsung will be the world’s largest memory chip, smartphone and TV maker. Usually, the company is a strong enough predictor for the trends concerned. As a result, the expected steep decline may be more than just a confirmation of the economic drag. Samsung has been unable to sell these memory chips because general buyers, including computer manufacturers and data centers, have significantly reduced their purchases. Instead of buying new, these companies are selling their reserves to meet the demand.
The economic downturn has also seen the price of memory chips fall. According to market intelligence provider Trendforce, prices for DRAM memory chips used for PCs and smartphones fell nearly 20% in the quarter. Trendforce also says that NAND flash chips used for data storage fell between 10% and 15% over the same period.
Samsung continues to invest despite struggling with profits.
In 2022, Samsung’s total revenue was 302.2 trillion won, an increase of 8% from 279.6 trillion won in 2021. However, the company’s operating profit for the quarter ended December was 4.3 trillion won. This was 69% accidents as compared to the same period in 2021. in january 1 statementSamsung said it “expects the effects of the economic downturn to continue” into 2023. Despite this, the company expects demand to begin “recovering” sometime in H2 2023.
Still, Samsung’s investments aren’t slowing down. Last month, Samsung Group said it would Invest up to 300 trillion KRW (about $228 billion) for a new semiconductor complex in South Korea. The complex is expected to be the largest in the world.
Samsung already has the backing of the South Korean government. The government wants the campus outside Seoul and hopes it will provide many jobs for residents of the area.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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