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| This marks Samsung's worst quarterly profit since the first quarter of 2009 Photo Credit: Samsung |
Samsung's second-quarter net profit fell 84.5 percent to KRW 1.72 trillion, and sales dropped 22.3 percent to 60 trillion won.
The firm — One of the world's largest makers of memory chips
and smartphones — blamed weak demand for its chips and mobile phones, but
offered an optimistic outlook for the remainder of the year.
"Global demand is expected to gradually recover in the
second half of the year, which should lead to an improvement in earnings driven
by the component business," it said, but added "continued
macroeconomic risks could prove to be a challenge."
South Korean chipmakers, led by Samsung, enjoyed record
profits in recent years as prices for their products soared, but the global
economic slowdown has dealt a blow to memory chip sales.
Demand swelled during the pandemic as consumers bought
computers and smartphones during lockdowns, prompting chip makers to ramp up
production.
But demand quickly diminished as lockdowns lifted and
weakened further in the face of soaring inflation and rising interest rates.
Joanne Chiao, an analyst at market research firm TrendForce,
said output would decrease further — by an estimated 9.3 percent — this year
owing to a weak overall economy.
"Consumer demand has weakened, leading to budget cuts
by companies and ongoing order cancellations," Chiao added.
TrendForce forecast price declines of DRAM chips — often
used in PCs and smartphones — to slow in the second half of the year as
chipmakers tighten supply after prices plunged as much as 18 percent in the
second quarter.
In April, Samsung said it would make a
"meaningful" cut in memory chip production, following the lead of
rivals SK Hynix and Micron.
The recent drop in profits has not deterred the firm from
making bold investments.
In March, it unveiled plans to contribute $227 billion over
the next two decades to building the world's largest chip centre in Yongin,
south of Seoul.
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