2024-01-09 05:57:21
Published on Jan 9, 2024 at 6:57 am
Samsung Electronics can barely see the end of the tunnel. The South Korean giant announced on Tuesday that it expected a drop of more than a third in its operating profit in the fourth quarter of 2023 compared to the same period of the previous year. This decline will be less severe than that recorded in the third quarter, but it reflects the more timid recovery than expected in the chip market, which constitutes the core of its activity.
Samsung Electronics forecasts an operating profit of 2.8 trillion won (1.9 billion euros) for the period from October to December, down 35% year-on-year. Turnover should fall by 4.9% to 67,000 billion won (47 billion euros). “It shows that the rebound is slower than we all thought,” Tom Kang, research director at Counterpoint Technology Market Research, told Bloomberg. “Prices are not increasing so quickly and demand in certain sectors is not so strong,” according to him.
In the third quarter, Samsung Electronics reported a 78% contraction in operating profits year-on-year, to 2.4 trillion won – or 1.7 billion euros. This Tuesday, the stock fell 2% on the Seoul Stock Exchange.
A sector in pain
The world’s number one maker of NAND and DRAM memory chips and the world’s leading smartphone manufacturer, the South Korean giant is suffering from weak demand for consumer electronic devices and, with it, a slowdown in demand for semiconductors.
In recent years, the group, like all its competitors, had recorded record profits thanks to rising prices and a boom in demand for computers and smartphones during the Covid pandemic. The trend reversed after the crisis and due to the global economic slowdown.
Optimistic, however, Samsung declared in October that it expected more favorable conditions on the memory market in the coming months. According to the company, demand for PCs and mobile phones will likely be driven by the replacement cycle of products sold during the pandemic.
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