96% Down YoY
Samsung Electronics’ second-quarter operating profit plunged 96 percent year on year, according to a forecast. This means that it may hit a 14-year low as fears of a semiconductor supply glut intensify.
According to a survey of 27 analysts by financial information firm Refinitiv’s SmartEstimate, Samsung’s operating profit for the April-June period of 2023 is expected to fall to 555 billion won (US$425 million), Reuters reported on July 6. This is the worst performance since the Korean tech giant posted an operating loss of 740 billion won in the fourth quarter of 2008 during the global financial crisis.
In the second quarter of 2022 the company posted an operating profit of 14.1 trillion won led by its semiconductor business division, despite sluggish sales of sets such as smartphones and TVs. In particular, a slump in the semiconductor sector was analyzed as a result of a 13-18 percent drop in the prices of DRAM memory semiconductors and the impact of customers refraining from placing new orders and depleting inventories.
Meanwhile, the percentage of its sales in China in its total sales fell to its lowest ever in 2022. This was blamed on sluggish demand for smartphones in China, and the U.S.-China conflict negatively affected its semiconductor business. On the other hand, the company’s production in the Americas and Korea increased, making up for the drop in the Chinese market.
According to Samsung Electronics’ sustainability report on June 6, its net sales in China hit 35.6 trillion won in 2022, down 10 trillion won from 45.6 trillion won in the previous year. It was the lowest in seven years since 31 trillion won in 2015. The proportion of sales in China was 12 percent, down 4 percentage points from 16 percent in the previous year.
Unlike China, the proportion of its sales in the Americas market soared. During the same period, the sales reached a record high of 119 trillion won. The percentage was also the highest ever at 39 percent. This represented an increase of four percentage points from 35 percent in the previous year and an 18 percentage point increase from 21 percent in 2008.