Samsung Electronics' operating profit plunges 69% in fourth quarter amid falling demand

By Park Yoon-bae Posted : January 6, 2023, 16:24 Updated : January 6, 2023, 17:56

[Courtesy of Samsung Electronics]

SEOUL -- Samsung Electronics' operating profit nosedived 69 percent to 4.3 trillion won ($3.37 billion) in the fourth quarter of last year from a year before due to the falling prices of memory chips amid a global economic slowdown, the IT giant said on January 6.
It was the first time since the third quarter of 2014 that Samsung has posted a quarterly operating profit of less than 5 trillion won.
The earnings shock came although the company enjoyed record-high yearly sales of 301.77 trillion won in 2022, up 7.9 percent from 2021. It marked the first time that the amount has surpassed the 300-trillion-won mark. However, Samsung’s yearly operating profit fell 16 percent to 43.37 trillion won from a year before.
All the sales and earnings figures were estimated one. The firm is scheduled to announce its final figures on January 31.
The company said that its memory chip and smartphone sales contracted sharply last year as demand for the products plunged amid a global economic downturn. It added that higher interest rates around the world and the gloomier economic outlook added fuel to the fire.
Samsung also said it showed a poor performance in other sectors such as mobile gadgets and equipment. Its home appliance division saw its profitability aggravating due to sluggish demand and growing production costs.
The U.S. dollar’s weakness against the Korean won was also found to have had a negative effect on Samsung’s earnings figures because 80 percent of its sales took place overseas.
Analysts predicted that the situation will not get better for Samsung this year as there are many downside risks such as the U.S. move to raise its interest rate further with no sign of an economic turnaround in sight.
However, Samsung has so far had no plan to reduce its memory chip production, although many of its global rivals cut down on both production and investment.
Market watcher said that Samsung’s performance is not likely to get better at least until the end of the first half of this year, adding that the downward trend could be reversed in the latter half if the global economy shows signs of recovery.

On the Seoul stock exchange, Samsung Electronics closed 1.37 percent higher at 59,000 won. Investors seemed to believe that the company may opt to cut its semiconductor production to cope with the difficult situation.

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