LAS VEGAS: Samsung Electronics, the global tech giant based in South Korea, anticipates a significant downturn in its profits for the last quarter of 2023, with a projected 35% decline in operating profit compared to the same period in 2022. This stark decrease, much worse than analysts’ expectations, reflects a persistently weak global demand for consumer electronics.
Renowned as the largest producer of memory chips, smartphones, and televisions worldwide, Samsung is set to unveil its comprehensive financial earnings report on January 31. The company estimated that its operating profit would hit 2.8 trillion won ($2.13 billion; £1.76 billion) in the October-December quarter, falling far below the approximately 3.7 trillion won projected by industry analysts.
The pandemic initially drove up demand for electronic devices and memory chips, as people invested in home-related tech during lockdowns. However, the scenario reversed last year as memory chip prices sharply declined due to a surplus of these critical components post-pandemic, coupled with sluggish sales of laptops and mobile phones.
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This downward trend in chip prices had a pronounced impact on Samsung’s earnings, witnessing a staggering 77% drop in operating profit for the third quarter of 2023 compared to the same period a year prior. The preceding quarter was even more severe, with a 95% plunge in the same profitability measure, prompting Samsung to revise down its planned production of memory chips.
“We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured,” the company said at the time.
On Tuesday, Samsung issued a cautionary statement coinciding with the commencement of CES in Las Vegas, the premier global trade show for consumer technology. CES not only showcases cutting-edge innovations but also serves as an annual congregation for key stakeholders in the tech sector. Anticipated attendance for this year’s event includes around 130,000 visitors and 4,000 exhibitors.
