Samsung Demand For Semiconductors And Smartphones Remains Weak
Aa
Share
Demand for smartphones across all price ranges is expected to decline quarterly in the first three months of this year due to the continuing economic slowdown and other factors contributing to macroeconomic instability.
Samsung is suffring for lower demand
Samsung is the world's largest manufacturer of two main types of memory chips called DRAM, which allows devices to multitask, and NAND flash, which provides storage in devices.
Samsung Electronics Co. expects demand for semiconductors and smartphones to remain weak as macroeconomic challenges and recession fears continue to weigh on sales.
The global smartphone industry is also in crisis, causing profits to fall for Samsung, the world's largest smartphone maker by shipments.
Demand for smartphones across all price ranges will decline quarterly in the first three months of this year due to continued economic slowdown and other factors contributing to macroeconomic instability.
Memory chip makers, many with large inventories, are also making bleak predictions as demand for gadgets continues to decline after the pandemic boom.
Samsung's profit
Samsung's fourth-quarter operating profit was 4.31 trillion won, equivalent to $3.5 billion. Revenue for the three-month period fell by about 8% compared to last year to 70.5 trillion won.
The company's net profit for the last three months of 2022 more than doubled to 23.84 trillion won, reflecting a one-time tax cut based on new accounting procedures as part of a recent revision of South Korea's subsidiary dividend tax rules, Samsung said.
Samsung's full-year net profit for 2022 was 55.6 trillion won, an increase of 39.5% over the previous year. Revenue for the full year was 302.2 trillion won, up 8% over the previous year.
Samsung will keep its 2023 capex plans
Despite the current slowdown, Samsung said it will keep its 2023 capex plans at a similar level to last year as it wants to prepare for mid- to long-term demand. The move contrasts with that of rivals, which have already withdrawn their capacity expansion plans or slashed production for this year to ease the oversupply.
Samsung said it is in the process of optimizing and upgrading its production lines.
While tough market conditions continue, Samsung plans to launch its new Galaxy S23 series of smartphones this week as the industry's first major launch this year.
Opinion of analysts
Given the global economic slowdown and persistent inflation and geopolitical tensions, the smartphone market is expected to shrink in 2023.
Memory prices peaked during the early Covid-19 pandemic due to strong demand for tech products and began to fall in late 2021. Quarterly declines became steeper in the second half of last year.
Industry analysts expect average contract prices for both types of memory to continue declining in the first half of the year as demand remains weak and inventory levels high amid continued macroeconomic challenges and deepening recession fears.
Conditions may improve in the second half of this year depending on macroeconomic developments that could revive global demand for chips. Memory orders may increase as corporate and consumer spending rebounds based on changes in interest rate policy.
Samsung share prices
In late January, Samsung's shares rose to their highest levels of six months ago. But then Samsung shares traded about 3.5% lower on Tuesday afternoon after the results were announced.
Highest scores in January were read at 64,600.00 then dropped to 61,000.00
Source: wsj.com, finance.yahoo.com
