South Korean tech giants attributed the sharp drop in profits to weak demand for memory chips.
Samsung Electronics forecasts its worst fourth-quarter profit in eight years amid sharp declines in global demand for memory chips and smartphones.
Profits for the October-December period are estimated to have plummeted 69% to 4.3 trillion won ($3.4 billion), the South Korean tech giant said Friday.
Weak demand for memory chips “exceeded expectations as customers adjusted inventories … to further tighten fiscal policy, fueled by concerns over deteriorating consumer sentiment.” [by] High global interest rates and a weak economic outlook continue,” Samsung said in a statement.
Preliminary results, well below expectations, show Samsung’s lowest quarterly profit since the third quarter of 2014.
Dismal earnings forecasts for the world’s largest memory chip, smartphone and TV maker are leading global consumer demand and setting a weak tone for other tech companies’ quarterly results.
“All of Samsung’s businesses struggled, especially chips and mobile,” said Lee Min-hee, an analyst at BNK Securities.
Rising global interest rates and rising costs of living are reducing demand for semiconductors that supply rivals such as Samsung smartphones and Apple.
“Memory chip prices fell to the mid-20% during the quarter, and high-end mobile phones such as foldables similarly failed to sell. China’s largest iPhone factory during the quarter.
Three analysts say they expect Samsung’s profits to fall again in the quarter, with chip business likely to see an operating loss as oversupply drives memory chip prices to fall further. said.
Samsung said in October that it expected no major changes to its investments in 2023.
Analysts say Samsung has so far not announced cutbacks in memory chip production, but it could adjust investments organically, such as by delaying the introduction of equipment.