Samsung expected to experience worst profit drop since 2009. Samsung is preparing to report its worst profit drop in 14 years, mainly due to free-falling prices for memory chips – the company’s core business – and weakness of the question.
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This was reported by CNBC, explaining that the South Korean company earlier this month already warned of “significant” cuts in chip production and a worse-than-expected drop in quarterly operating profit.
Samsung reported operating income of 600 billion Korean won (about 417 million euros) in the first quarter of 2023, down from 14.12 trillion won in the same period a year earlier and 4.31 trillion of won in the last quarter of 2022. These are the lowest numbers ever since the first quarter of 2009.
Samsung is the largest maker of memory chips, used in computers and servers in data centers. At the height of the pandemic, demand for consumer electronics was high, with people forced to stay at home, and the company produced huge quantities of chips for these products. Now buyers have cut back on orders amid inflation and doubts about the economic outlook, leading to a glut in memory chips.
Samsung previously explained that “Memory demand has dropped sharply due to the macroeconomic situation and slowing customer buying sentiment as many customers continue to adjust their inventories for financial purposes.” The company earlier this month had reported a significant reduction in the production of memory chips, in particular that of “products with guaranteed supply”, references to products for which sufficient inventories have already been produced.
The drop in demand for Samsung’s memories is symptomatic of a one-year crisis for the entire consumer electronics and technology sector, with repercussions that do not only concern the South Korean company.
