Samsung Electronics stated Tuesday that its fourth-quarter working income plunged almost 70 p.c, the most important drop in additional than eight years, as the worldwide financial slowdown dealt a blow to electronics and chips gross sales.
The South Korean tech big stated working income for the October to December interval slumped to 4.3 trillion received ($3.4 billion), a 69 p.c drop from a 12 months earlier.
The drop is consistent with the estimate Samsung launched earlier this month and marks the corporate’s worst decline in quarterly income because the third quarter of 2014.
“The enterprise atmosphere deteriorated considerably within the fourth quarter as a result of weak demand amid a worldwide financial slowdown,” Samsung stated in an announcement.
Gross sales fell eight p.c to 70.46 trillion received from the identical interval the earlier 12 months.
Samsung singled out weak demand for reminiscence chips, saying the sector had been hit arduous “as costs fell and prospects continued to regulate stock amid deepening uncertainties within the exterior atmosphere”.
The agency is the flagship subsidiary of the large Samsung Group, by far the most important of the family-controlled conglomerates that dominate enterprise in Asia’s fourth-largest economic system.
The fourth-quarter drop is the second consecutive margin squeeze for Samsung, which noticed a 31 p.c fall in working income within the third quarter year-on-year.
For the complete 12 months, Samsung reported 43.38 trillion received in working revenue and a record-high annual income of 302.23 trillion received.
– ‘Heavy blow’ –
Till the second quarter of 2022, Samsung, together with different tech corporations, considerably benefited from robust demand for digital gadgets — in addition to chips that energy them — through the pandemic.
However the international economic system is now dealing with a number of challenges, together with hovering inflation, rising rates of interest and better vitality prices.
International reminiscence chip income dropped 10 p.c final 12 months, as digital gear producers “began to deplete reminiscence stock that they had been holding in anticipation of stronger demand,” in line with tech analysis agency Gartner.
“Shoppers additionally started to scale back spending, with PC and smartphone demand struggling, after which enterprises beginning to cut back spending in anticipation of a worldwide recession, all of which impacted total semiconductor progress,” stated Andrew Norwood, VP Analyst at Gartner.
The macroeconomic uncertainties are anticipated to persist in 2023, Samsung stated, including: “the Firm anticipates demand to start recovering within the second half.”
“Samsung was dealt a heavy blow with deteriorating exterior components, like weaker demand and rising prices,” Samsung Electronics vice chairman Han Jong-hee stated throughout CES 2023 in Las Vegas earlier this month, in line with the Yonhap Information Company.
“I feel this troublesome enterprise atmosphere will proceed this 12 months as a protracted financial slowdown and dangers in provide chains improve uncertainties.”