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 in eight years. Revenue
fell 8% to 70.5 trillion won.
With memory chip prices falling by double-digit percentages
in 2022, Samsung's chip profit likewise tumbled - to about 270 billion won in
the fourth quarter from 8.83 trillion won in the same period a year prior,
marking the lowest since a 2011 change in accounting standards, Samsung's
website showed.
Some analysts expect the chip business to book a loss in the
first quarter, pulling overall profit below that of the fourth.
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.
In mobile, Samsung said fourth-quarter profit fell to 1.7
trillion won from 2.66 trillion won a year earlier, as a decline in low- and
mid-end smartphone sales was greater than expected due to "continued inflation
and geopolitical instability."
Samsung plans to unveil its latest Galaxy S flagship
smartphones later this week.
Shares in Samsung fell 2.1% in morning trade, versus a 0.2%
drop in wider market.
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