Samsung recorded an unpleasant financial report in Q4 2022, which is the lowest profit in the last eight years.
In Q4 2022, Samsung's profits slumped by two-thirds to 4.3 trillion won, down from 13.87 trillion won in Q4 2021. This decline was influenced by the slump in memory chip prices and reduced demand for electronic devices.
This profit decline was recorded as the lowest since Q3 2014. This decline is also expected to continue until Q1 2023, we were quoted as saying by Reuters, Friday (6/1/2023).
"All of Samsung's businesses are having a hard time, especially chips and mobile," said Lee Min-hee, analyst at BNK Investment & Securities.
Meanwhile, Samsung's revenue fell 9% compared to the same period a year earlier, namely to 70 trillion won, which was listed in their initial financial report. The company with the 4th largest capitalization in Asia will report its full financial statements on January 31.
There are many factors that are thought to be the cause of this decline. Including rising interest rates globally and the soaring cost of living in various countries, causing a decrease in demand for mobile phones and many other devices made by Samsung. It also impacts the semiconductor orders they make for other companies like Apple.
"Especially for the memory business, the decline in demand in the fourth quarter was greater than previously thought as consumers began to adjust their inventories to prepare for financial tightening," Samsung said in a statement.
Likewise, profits from its mobile business declined in Q4 as cellphone sales and revenue declined as a result of ongoing macroeconomic issues.
"Prices of memory chips fell by about 20% during the quarter, and high-end phones such as foldable phones did not sell well," said Lee.
Then there is also a problem at the world's largest iPhone factory owned by Foxconn which also has an impact on Samsung's business, namely the Samsung display panel business, which is affected because iPhone production is hampered.
Analysts also predict that Samsung's profits will slump again this quarter, as operating losses in the chip business continue to occur due to slumping chip prices.