Samsung makes lowest profit in eight years due to falling demand for chips and phones

Samsung made about 69 percent less profit last quarter than a year earlier. The company reports this at the presentation of its quarterly figures. Samsung attributes this to falling demand for PCs, smartphones and memory.

Samsung turned last quarter a turnover of 52.77 billion euros, a decrease of 8 percent compared to a year ago. The company’s net profit fell to EUR 3.23 billion. With that, the company had about 69 percent less profit than in the same period in 2021 and the company had its worst quarter since 2014, as previously expected. For the entire year 2022, Samsung had a record turnover of 226.38 billion euros and a profit of 32.49 billion euros.

The chip production division of the company recorded a turnover of 15 billion euros and a net profit of 202 million euros last quarter. According to Reuters that is the lowest profit that Samsung’s chip division made since the first quarter of 2009. Samsung attributes this fall to falling demand, among other things, while customers are using up their existing stocks and therefore buying fewer chips. Among other things, the demand for memory chips and PC hardware fell. The company expects the effects of the economic downturn to last for the foreseeable future. At the same time, Samsung continues to invest in its chip division. The manufacturer says capital expenditures remain at about the same level as last year.

Samsung also says that demand for smartphones is weak. That division of the company therefore recorded a decline in turnover and profit compared to a quarter earlier. The impact of declining sales of lower-priced phones was greater than previously expected, according to Samsung, while flagship sales outperformed market expectations. Samsung’s smartphone division and network branch had a turnover of 22.39 billion euros in the last quarter of 2022. The profit amounted to 1.27 billion euros. Samsung also expects demand in the smartphone market to shrink in the coming year.

The company’s Display division also saw declining demand for smartphone screens. The business part that makes large screens, for example for televisions, saw its loss fall due to increasing sales of QD OLED panels. Samsung also says its “LCD stock is completely depleted.” The company previously stopped producing LCDs to focus on quantum dot and QD OLED.