April 25, 2023: Samsung could state its worst profit in 14 years this week as prices for memory chips, its most significant business, continue to fall while demand weakens.
Earlier this month, the South Korean technology giant said it would post an operating profit of 600 billion Korean won for the first quarter. If Samsung stated this number, it would be the firm’s lowest profit since the initial quarter of 2009.
Samsung is releasing preliminary earnings guidance but does not give detailed figures. It reports its entire first-quarter earnings on Thursday.
Samsung is the huge maker of memory chips in the world, which go into all things from PCs to servers in data centres.
During the height of the coronavirus, demand for consumer electronics was high as people remained at home. Electronics companies piled up chips to go into these things. But buyers are cutting back on purchases of these goods because of inflation and macroeconomic concerns, leading to a memory flake glut.
For example, the IDC data stated that PC shipments decreased 29% year-on-year in the first quarter.
Prices of memory chips have decreased over the previous few months because of the high inventories and a lack of demand.
“The memory market is amid its worst slump in decades. Even as EV markets surge, consumer electronics and traditional server businesses are witnessing some of the most severe slowdowns,” CrispIdea stated in a research note published in the previous week.
Analysts at Mirae Asset Securities assess that Samsung’s chip division will publish a 4.4 trillion Korean winning loss in the initial quarter.
This month, Samsung stated that it was cutting production of its memory chips to a “meaningful level,” which cited a worsening macroeconomic scenario and decreasing consumer demand. Samsung had previously stated that it would not lower output but has followed rivals SK Hynix and Micron.
Investors hope a production cut from Samsung, the world’s biggest memory chipmaker, will help improve prices as players dig into existing inventories.
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