Samsung profits plummet by 95%. Samsung’s memory chip business is having a terrible quarter, as falling demand and high inventories contributed to a 4.58 trillion won (about $3.4 billion) loss for the division, a result deeply negative scoring quarterly results and profit.
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This was reported by Bloomberg, according to which losses from the chip unit, which according to CNBC is the main profit vector for the company, contributed to Samsung’s quarterly operating profit plummeting by 95 percent, to 640 billion won (about 478 million dollars), as anticipated in recent days.
Several factors contributed to Samsung’s losses in its memory chip division. First, smartphone and PC makers stockpiled chips during the pandemic to save themselves from potential supply shortages as demand soared, but then ended up with large inventory overruns as consumer demand fell amid high inflation and global economic uncertainties.
Samsung hopes the chip business will start to recover in the second half of this year. Existing stocks are expected to be depleted by then, and new launches of smartphones and PCs will stimulate demand. This is related to hopes of economic recovery in China, which, as Bloomberg reports, is the world’s largest market for PCs and smartphones.
Nonetheless, the company has no plans to cut investment in memory chips:
We have cut short-term production plans, but while we project solid medium- to long-term demand, we will continue to invest in infrastructure to secure and to expand R&D investment to consolidate technology leadership. Investment levels in 2023 are expected to be broadly consistent with last year.
However, it’s not all bad news for the South Korean electronics giant. Profit for its smartphone division with the launch of the Galaxy S23 range last quarter, increased by 3% to 3.94 trillion won (about $2.9 billion) from a year earlier. Revenue, however, fell 2% to 30.74 trillion won (about $22.9 billion).
