Samsung’s Q4 2022 Financial Reports Shows an Enormous Drop in Profitability as Demand Weakens

Samsung’s profitability dropped significantly in the fourth quarter of last year as a result of dwindling demand for and slower sales of its memory chips. The South Korean IT giant recently released his financial report, which showed that the business saw a significant decline of close to 70% in Q4 2022.

When compared to the same period last year, profits have significantly decreased. There are various causes for the decline in profitability, including the weak demand for smartphones and chips brought on by global economic problems. The company stated that for the fourth quarter of 2022, it had anticipated an operating profit of 4.3 trillion won and sales of almost 70 trillion won.

Image: Reuters

However, it had a 9% year-over-year decline in sales and a 69 percent decline in operating profits at the same period. Furthermore, from the third quarter, when Samsung also had its first year-over-year profit reduction in three years, operational earnings had decreased by more than half. This was also brought on by a decline in chip demand, which lowered market sales. 

The South Korean business claimed that when clients reduced their supplies of the essential parts for digital gadgets, there was a greater-than-anticipated decline in demand for computer chips.

For the memory business, the decline in fourth-quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances Smartphone sales and revenue decreased due to weak demand resulting from prolonged macro issues”

Analysts claim that Samsung, which is pursuing a policy of investing in a downturn to win market share, has been contributing to the present supply glut with its increased expenditure on chip manufacture. US prohibitions on semiconductor shipments to China and delays in the manufacture of the iPhone at Foxconn’s Chinese facility because of a widespread Covid-19 outbreak have made the oversupply issues worse. Samsung’s smartphone competitor Apple is also a significant buyer of the company’s semiconductors and panels.

Samsung said that despite the uncertainty surrounding the outside variables that have led to a “possible global economic crisis,” this pattern is still evident. The decrease in sales also caused the average sales prices of the chips to drop to lower levels than anticipated.

ABOUT THE AUTHOR

Muhammad Zuhair


Passionate about technology and gaming content, Zuhair focuses on analysing information and then presenting it to the audience.
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