For three years, Samsung was able to increase consistently in the third quarter; however, that growth has suddenly abruptly stopped. While the company’s revenue only managed to expand by less than 3% over the same time the previous year, this stop results in an operating profit decline of approximately 32%
The South Korean company anticipates its operating profit to be about KRW 10.8 trillion (roughly $) and it’s aggregated sales to be around KRW 76 trillion (roughly $). The company’s operating profit has decreased by 31.7% year over year even though its sales have climbed by 2.73%. In the last three years, this is the first earnings drop for the corporation.
The fall in demand for memory chips, in the opinion of experts, is the cause of Samsung’s declining earnings. Server clients apparently readjusted their inventories and spent prudently as a result of the present economic slump. Moreover, as the chip scarcity issue began to ease, the cost of DRAM and NAND chips has been rapidly falling since the beginning of this year.
Consumers spent a lot of money on smartphones, tablets, laptops, PCs, game consoles, and household appliances during the COVID-19 outbreak. However, as companies and schools opened, such purchasing fell. Currently, there is less demand for TVs and other household appliances, which has an impact on the sales of the company. High interest rates on borrowing, escalating inflation, and geopolitical tensions all contributed to lower revenue turnout.
Due to weakening PC demand, chipmaker Advanced Micro Devices Inc. (AMD) published third-quarter revenue forecasts on Thursday that were nearly $1 billion less than projected, indicating the chip downturn may be considerably worse than anticipated. NVIDIA disclosed a $1.4 billion deficit in August due to decreased GPU sales as a result of the collapse of the cryptocurrency mining industry.
This eventually resulted in substandard quarterly results and significant losses for the company’s shares. Additionally, Intel, the market leader in CPUs, posted its first quarterly loss in decades, losing $500 million despite a 17% drop in sales.
By the end of this month, the South Korean giant will reveal its real Q3 2022 financial results, at which point we will learn more about the company’s projection for the next quarter and the following year.