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Q1 profit plunges amid weak memory chip demand

admin by admin
April 27, 2023
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Q1 profit plunges amid weak memory chip demand
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Samsung at Mobile World Congress 2023 in Barcelona, ​​Spain on March 2, 2023. (Photo by Joanne Cross/NurPhoto for Getty Images)

Joan Cross | Null Photo | Getty Images

South Korean electronics giant Samsung’s first-quarter operating profit plummeted as memory chip prices continued to fall and demand remained weak.

Here are Samsung’s first quarter earnings:

Related investment news

CNBC Pro

Earnings: 63.75 trillion Korean won (about $47.6 billion), down 18% year-on-year.it is equivalent Samsung’s own guidance of about 63 trillion won However, Refinitiv’s consensus estimate is below the 63.9 trillion won analysts expected.

Operating income: 640 billion Korean won (about $478.55 million) decreased from 14.12 trillion won a year earlier.company Guidance issued earlier this month The first quarter profit is expected to be KRW 600 billion.

This is the company’s lowest operating profit since the first quarter of 2009.

Samsung is ahead of its memory recovery

Traditionally, Samsung’s biggest profit driver has been its semiconductor division, which consists of the sale of memory chips used in everything from personal computers to smartphones to servers in data centers.

Samsung’s semiconductor business posted a loss of 4.58 trillion won, compared with a profit of 8.45 trillion won in the same period last year.

Read more about CNBC Pro tech and crypto

Smartphone and PC makers stockpiled chips during the pandemic as demand for consumer devices increased, but are now grappling with excess inventories as rising inflation discouraged consumers from buying these items. is. This has caused the prices of memory chips sold by Samsung to drop.

The South Korean giant said this month It will be “meaningful”. Following smaller rivals such as SK Hynix and Micron, it cut back on memory chip production.

“Samsung Electronics announced disappointing first quarter numbers, but also announced a significant production cut amid a deep recession for memory chips. The market has since responded positively to the news.” said SK Kim of Daiwa Securities Capital Markets. He told CNBC’s “Squawk Box Asia” on Thursday.

However, Samsung predicted a recovery later this year.

“Demand is expected to gradually recover in the second half of the year as customer inventory levels are expected to decline,” Samsung said.

Memory chip market faces 'deep recession', say analysts

Samsung said it expects limited demand to pick up Larger data centers are making more conservative investments and customers continue to adjust their inventory. Samsung also expects new smartphone launches, PC promotions and increased adoption of new CPUs to boost demand for memory chips.

Samsung rival SK Hynix Memory chip recovery is also induced when it reported a record quarterly loss on Wednesday,

“If there is a recovery, it will be largely due to production cuts and some restocking demand,” Kim said.

Samsung shares rose about 0.6% on Thursday.

S23 Ultra gives mobile a boost

In Q1, Samsung launched its latest flagship product Smartphone called S23 seriesboosted the mobile sector.

Mobile business revenue increased by 22% from the previous quarter to KRW 30.74 trillion, but decreased by 2% from the same period last year. Operating profit was 3.94 trillion won, up 3% year-on-year.

Samsung was helped by the sale of its highest-priced smartphone, the $1,200 S23 Ultra.

“The premium market has grown in both volume and value, even as demand for smartphones has slowed due to persistent macro uncertainty,” Samsung said in a statement. “Sales increased and profitability recovered to double digits due to strong sales of new premium models centered on the S23 Ultra and efforts to improve operational efficiency.”

Chip market expected to recover in second half, according to financial services firm

Overall, Samsung’s smartphone division appeared to remain resilient amid a tough quarter for the industry as a whole. Smartphone shipments fell 13% in the first quarter of this year compared to the same period last year, according to data released Thursday by market research firm Canalys. According to Canalys, Samsung has reclaimed the top spot in smartphone market share globally.

Tech recovery?

Samsung is the latest technology company to report earnings globally, following figures from the US tech giant alphabet, microsoft and meta.

Daniel Yoo, head of global asset allocation at Yuanta Securities Korea, pointed to the strong performance of these American tech companies.

Metaso Advertising by Chinese companies boosted first-quarter sales While Microsoft posted Third quarter results It exceeded analyst expectations on both earnings and earnings.

“I think there will be talk of a recovery. The good news is that despite such low margins, we are seeing sharp price stability,” Yu said Thursday on CNBC’s “Street Signs Asia.” said in

Tags: Alphabet Inc.Asian economyBreaking News: TechnologyBusiness newsChipDaniel YudemandearningsMemoryMeta Platforms IncMicrosoftplungesprofittechnologyweak
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