Samsung reported a 95% decrease in operating profit during the first quarter of 2023, driven by a $3.4B loss in its core chip business.
The South Korean memory chip maker expects inventory levels to start falling in the second quarter and has targeted a gradual recovery for chips in H2 2023.
- The January-March period marked Samsung’s smallest quarterly operating profit since 2009.
- Operating profit fell to 640 billion won ($478.6M) for the quarter, down 95% from a year earlier.
- Its
chip division, considered its biggest profit driver, reported a loss of
4.58 trillion won ($3.41B) versus an 8.45 trillion won profit a year
ago.
- On a positive note, profit in its smartphone division rose 3% over the previous year.
- The company attributed the loss in its chip division to weak demand for tech devices leading to high inventories.
- During the pandemic, PC and phone makers stockpiled chips as a hedge while consumer demand for their devices skyrocketed.
- They were left with high inventories when demand plummeted due to high inflation and economic uncertainty.
- Samsung
expects those inventories to have run down in the second half of this
year. It's also betting on China's economic recovery and increased
demand from new PC and smartphone launches.
