The tech giant expects a “gradual recovery” in semiconductor demand in the second half of the year due to its customers’ inventory drawdowns and their retrofitting needs.
Samsung announced Thursday that its profits fell by more than 86% in the first quarter of 2023 and recorded the lowest level in 14 years, justifying this with the global economic slowdown that dealt a blow to sales of chips and electronic products.
The South Korean tech giant said its operating profit in the January-March period was 9,750 billion won (6.6 billion euros) lower than in the same period a year earlier.
It amounted to 1570 billion won (1.06 billion euros), compared to 11320 billion won during the same period last year (7.7 billion euros).
Net profit of Samsung Electronics Co. declined by 95 percent compared to last year, to 640 billion won (428 million euros).
Sales fell 18 percent over the same period to 63,750 billion won (42.5 billion euros), the company said in a statement.
She pointed to the decline in demand for electronic chips, which usually represent half of her profits, as well as to the decrease in their price.
Samsung’s chip subsidiary faced losses of 4,580 billion won (3.1 billion euros), its first net loss since 2009 when the world was emerging from the 2008 financial crisis.
Still, the tech giant expects a “gradual recovery” in semiconductor demand in the second half of the year due to its customers’ low inventory and retrofitting needs.
On Thursday, Samsung shares fell 0.3 percent on the Seoul Stock Exchange.
Samsung Electronics is the heart of the Samsung Group and its largest subsidiary.
South Korean chip makers, led by Samsung, have posted record profits in recent years, driven by rising prices. But the slowdown in the global economy has affected this sector.
It was supported by purchases of electronic devices during the Covid-19 pandemic and then slowed under the influence of inflation and rising interest rates.
Analysts expect a more difficult period from April to July and do not rule out that Samsung will incur losses for the first time since 2008 during these few months.