Samsung is the world’s biggest smartphone manufacturer. It is also the largest supplier of AMOLED panels for smartphones. Other than this, the company is among the world’s largest memory chip suppliers. Despite its varied business, Samsung expected asignificant hit to its operating profits in Q1 2023due to an economic downturn and lower consumer spending. True to its forecast, the company has published its earnings for the first quarter of the year, where it has reported a massive 95% decline in profits.
In Q1 2023, the Koreanconglomerate generated revenuesof 63.75 trillion won (~$47.5 billion), a decline of 18% from the same period last year. More importantly, the company only posted a profit of 640 billion won (~$478 million). That’s a massive 95% decline from the record 14.12 trillion won (~$11.12 billion) profit the company generated in Q1 2022. This is the lowest profit Samsung has made since 2009.
Samsung’s lower earnings can be attributed to the massive 4.58 trillion won loss suffered by its semiconductor business. This is primarily due to a slowdown in demand, high inflation, and excess inventory levels post the pandemic. These factors combined caused memory chip prices to fall drastically, negatively affecting the company’s profits. For comparison, the division posted a profit of 8.45 trillion won a year ago.
This has forced Samsung to cut back on its memory chip production for the first time. However, it won’t change its investment plans, and they will remain at the same level as last year.
On the bright side, Samsung’s mobile division posted a healthy profit of 3.94 trillion won (~$2.93 billion) — up 3% from last year — on revenues of 30.74 trillion won. This is thanks to the strong sales of the premiumGalaxy S23 series, even though its overall smartphone sales declined.
Samsung does not expect the year’s second half to be as grim. It forecasts a rebound in consumer demand as the excess inventory level eases off. Smartphone sales and revenues should also rise in the year’s second half as the company prepares to launch its 2023 foldables in late July or early August.
