By Joyce Lee and Heekyong Yang
SEOUL (Reuters) – Samsung Electronics Co Ltd on Tuesday reported its lowest quarterly profit in eight years and said persistent macroeconomic uncertainty will make for a tough first half year, though demand is likely to start recovering in the second half.
Sluggish demand and inventory adjustment will continue to impact the chip business in the first quarter, Samsung said in a statement, adding it expects “smartphone demand to decline year-on-year due to the economic slowdown in major regions”.
The world’s biggest maker of memory chips and smartphones reported a 69% plunge in fourth-quarter profit, as consumer demand for electronic devices dropped while clients spent less in a weak economy, dragging down memory chip prices.
At 4.3 trillion won ($3.49 billion), October-December operating profit was Samsung’s lowest quarterly profit since 2014. Revenue fell 8% to 70.5 trillion won.
In its chip business, profit plunged to about 270 billion won from 8.83 trillion won in the same month a year earlier.
Memory chip prices, which fell by double-digit percentages in 2022, are widely expected to decline further in the first quarter as customers continue to hold off purchases and use up existing inventory while device demand remains depressed.
Last week, chipmaker Intel Corp said it expects to lose money in the current quarter as the personal computer industry experiences a chip glut.
Memory chip rivals Micron Technology Inc and SK Hynix Inc had already said they would slash investment in 2023.
Investors will be watching for whether Samsung avoids mentioning a direct chip production cut – as is its usual stance – or rather gives a clear signal of production cuts given the severity of the memory chip down-cycle.
($1 = 1,232.6000 won)
(Reporting by Joyce Lee and Heekyong Yang; Editing by Christopher Cushing)
