Samsung Electronics’ First-quarter profit is expected to be down 92 percent to any quarter in 14 years, as chip oversupply worsens amid a global economic downturn and buyers such as data centers and computer makers slow purchases.
The launch of a new flagship smartphone is expected to support mobile profits, analysts said, but its chip division reported a quarterly loss of more than KRW 3 trillion (roughly Rs. 18,903 crore) as memory chip prices fell. And its inventory value decreased. ,
SAMSUNGThe world’s largest maker of memory chips, TVs and smartphones by 2022 is a bellwether for global consumption trends. It is expected to announce preliminary first-quarter results on Friday and full results later this month, which is typically a seasonally weak period.
Operating profit likely fell to KRW 1.08 trillion (about Rs 6,769 crore) in the quarter ended March 31, according to Refinitiv SmartEstimate of 27 analysts, which are more consistently weighted.
This is the lowest since a KRW 590 billion (roughly Rs. 3,700 crore) profit in the first quarter of 2009, according to company data, and compared to an operating profit of KRW 14.12 trillion (roughly Rs. 88,553 crore) the previous year.
According to Trendforce data, prices for DRAM memory chips widely used in smartphones, PCs and servers fell about 20 percent during the quarter, while prices for NAND flash chips used in data storage fell about 10 percent to 15 percent. fell till
Customers including data center operators, smartphone and personal computer makers are avoiding buying new chips and instead using inventory, as rising inflation continues to slow consumer demand for tech equipment.
Chip buyers also remain conservative about making new investments as interest rates rise.
their rival micron technology And SK Hynix As a result, investment plans have been reduced, with the chip slump expected to last at least until the second half of 2023.
In contrast, Samsung hasn’t changed its investment plans yet. Analysts have said the tech giant is using this opportunity to expand its market share over competitors so it can take advantage of an eventual rebound in demand.
In February, Samsung Electronics said it planned to borrow KRW 20 trillion from the unit samsung display To be used as operational fund till August 2025.
Operating profit at Samsung’s mobile business fell 9 percent to KRW 3.46 trillion in the March quarter, an average of seven analyst estimates showed.
Analysts said while demand for smartphones is sluggish, premium models are more resilient.
Profits were supported by higher-margin flagship models Galaxy S23 IBK Investment & Securities analyst Kim Woon-ho said chain launches during the quarter accounted for about 20 percent of total sales.
© Thomson Reuters 2023