Days before presenting the results of the second quarter of your fiscal year, Samsung Electronics It has already warned its shareholders to prepare for bad news: its benefits in the period will fall no less than 96% year-on-year. Probably due to a combination of factors, including the macroeconomic situation and oversupply in the memory sector.
The group anticipates that it will have an operating profit in the last quarter of about 459 million dollars, when a year ago the profit it obtained reached 10.800 million dollars. Those benefits were already notably lower in the first three months of the year, when they stood at 490 million dollars, and now they have been reduced even more. In fact, if the estimates Samsung has announced turn out to be true, this quarter’s profits would be the company’s lowest since the first of 2009.
The consolidated sales predictions of Samsung Electronics also reflect that it continues to fall: from 59,000 million dollars in the second quarter of 2022 to 49,000 million in the first of 2023, and 46,000 million dollars expected for the second quarter of this year. Thus, Samsung’s sales last quarter would fall by 22% year-on-year.
Already last quarter, Samsung’s memory division, one of its main revenue areas, experienced a very large drop in demand: 56%. That means that only 6,600 million dollars entered, due to inventory adjustments, the economic brake and the weakness of consumer spending.
In addition, memory prices were declining across the industry as demand for equipment and systems fell after the pandemic, when spending on chips, components and equipment skyrocketed. That has led to a slowdown in demand today, as manufacturers have been left with unsold components and devices.
Samsung, like other memory manufacturers, has managed to slow down somewhat the economic bleeding caused by the slowdown in the memory sector by reducing its production, which has halted the fall in prices. But it seems that the sector will begin to recover soon, since according to the forecasts of Samsung itself and other large companies in the sector, the memory sector is expected to begin its recovery in the second half of 2023, when the level of prices drops. inventories.
Of course, the recovery will only be possible with a notable reduction in the production of memory chips, something that Samsung has already done, but maintaining that of high-end chips. Despite everything, in 2023 it is likely that technology companies will take precautions to avoid a false recovery, and that their investments will still be modest compared to those of other years.
As to Samsung mobile divisioncontinues to be one of its main sources of income, since generates 22% of its profits. It is therefore the second largest division of the group after the one dedicated to memory.
