Samsung Electronics posts 14-year low quarterly earnings amid chip slump

In a regulatory filing on Thursday, the tech giant said its operating profit in the January-March period was 640.2 billion won ($478.5 million), nose-diving 95.5 % from the 14.12 trillion won it posted a year earlier.

The figure was far lower than the consensus of 1.1 trillion won by local analysts provided by market intelligence FnGuide.

It was also the first time in 14 years that Samsung reported a quarterly operating income below the level of 1 trillion won, since the first quarter of 2009 when it logged 590 billion won in profit.

Sales fell 18.1 % to 63.75 trillion won during the three months, while net income marked 1.57 trillion won, dipping 86.1 % from a year ago.

Samsung’s Device Solutions unit, in charge of the chip business, recorded a deficit of 4.58 trillion won amid the global chip downturn. It is the first time in 14 years that Samsung posted a quarterly loss in the chip division since the first quarter of 2009 when it suffered a global financial crisis.

In its earnings guidance, released earlier this month, the tech giant predicted its January-March operating profit and sales to log 600 billion won and 63 trillion won, respectively.

With the guidance, Samsung also announced that it was cutting memory chip production to a “meaningful level" after reporting a worse-than-expected 96 % plunge in its quarterly operating profit estimate. It did not disclose the size of the cut; however, it was the first time the company made it official.

Samsung forecast the global chip market will shrink 6 % on-year to $563 billion this year and said the difficult conditions will likely continue throughout the year.

The company’s Device eXperience division, which oversees its home appliances and mobile device businesses, recorded an operating profit of 4.21 trillion won and sales of 46.22 trillion won in the first quarter.

The Mobile eXperience division, dedicated to smartphones and gadgets, also posted a strong performance, thanks to the global popularity of its latest flagship Galaxy S23 smartphones, offsetting the deficit in the chip business.

Samsung has significantly increased its investment to prepare for the future in a challenging environment.

In the first quarter of this year, it invested 10.7 trillion won in facilities, up 36 % from a year earlier, which was the largest amount on record for any first quarter for the company.

In the first quarter of this year, we invested KRW 10.7 trillion in facilities, up 36 % year-on-year. This is the largest amount ever in the first quarter.

Of this figure, semiconductors accounted for 9.8 trillion won and displays for around 300 billion won. Research and development expenses were 6.58 trillion won, a new all-time high following the previous quarter.

The Korea Herald

Asia News Network