2023-07-27 07:13:00
It’s confirmed for Samsung: as announced at the beginning of the month, the South Korean tech giant’s operating profit fell by -95% in the second quarter. It amounted to 668.5 billion won (473.6 million euros), against 14,100 billion won (10.5 billion euros) over the same period in 2022, according to a press release from the group published this week. Thursday July 27.
This is the worst quarterly result of the company, flagship of the Samsung group and by far its most important subsidiary, since the first quarter of 2009 when it fell to 590 billion won.
Turnover fell by -22% between April and May, to 60,000 billion won (42.1 billion euros).
To avoid data leaks, Samsung prohibits its employees from using ChatGPT
Weak global demand
Samsung was penalized by a glut of chips, which caused significant losses despite a downward revision of its production. The South Korean giant announced in April a significant reduction in its production of semiconductors, like its rivals SK Hynix and Micron.
“Demand for memory chips is bottoming out with slower-than-expected demand, coupled with inventory on the market, which is still being sold off since January,” reported to AFP Neil Shah, an analyst at Counterpoint Research, in early July. “This is a complete turnaround from last year, when the memory chip business contributed more than a third of the profit”he added.
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For market research firm TrendForce, the decline in prices for DRAM chips (random access memory chips), often used in PCs and smartphones, is expected to slow in the second half of the year, after falling -18% during of the second trimester.
The slowdown in the global economy has put a damper on the sector, after years of record profits fueled by soaring prices. Joanne Chiao, an analyst at TrendForce, said he expected output to continue to slow this year – by an estimated -9.3% – due to weakness in the broader economy.
Best for the end of the year
However, the South Korean giant appears confident.
“Global demand is expected to gradually recover in the second half of the year, which should lead to improved earnings thanks to the microchip business,” assures Samsung in its press release.
The document notes, however, that “the persistence of macroeconomic risks could prove to be an obstacle to this recovery in demand”.
The recent decline in profits has not deterred the company from making bold investments. In March, it announced plans to build the world’s largest microchip manufacturing center with $230 billion in private investment, mostly from Samsung Electronics.
230 billion dollars, the pharaonic investment of South Korea in semiconductors
(with agencies)
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