Enlarge / The regional headquarters of Samsung in Mountain View, California.
Getty Images/Smith Collection
Samsung’s next quarter is shaping up to be even worse than Samsung’s last quarter, which was already at an eight-year low. The company warned investors today that it’s a shocking 95.8 percent year-over-year drop in operating profit for Q1 2023. If that expectation holds, this will be the company’s worst quarter since 2009, which dates back to the company’s pre-smartphone era.
Samsung doesn’t have much explanation for the drop other than a weakening economy and lowered demand for chips. Preliminary results have the company making only 600 billion won ($450 million) in profit for Q1 2023, compared to 14.12 trillion won in profit ($10.7 billion) for Q1 2022.
While phones and TVs are probably Samsung’s biggest consumer-facing products, the company’s nigh-invisible component business makes up most of Samsung’s profits. Components like RAM and NAND storage chips don’t just ship in Samsung products, but also land in most other phones, laptops, desktops, TVs, and other electronics from Samsung’s competitors. A DigiTimes breakdown of Samsung’s business for 2022 has the memory division at 55 percent of profits, mobile at 22 percent, and displays at 11 percent, so Samsung’s profits mostly go up and down with the memory business.
Lowered chip demand has Samsung’s inventory piling up, with Bloomberg and other financial outlets reporting that Samsung will cut chip production while it sorts through its piles of unsold chips. Other memory vendors like Micron and Hynix are suffering, too, and they have already cut production.
Samsung’s full earning report will be out later this month.
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