Samsung’s quarterly profit fell 58% to its lowest level in six years as demand for electronics fell and a global economic slowdown upended the outlook for the memory chip industry, media reported.
Analysts say both smartphone consumers and businesses are cutting back on spending and investment in the wake of high inflation and rising interest rates, while smartphone makers and other customers are curbing memory chip orders. In 2018, smartphone prices fell as demand declined, the report said. According to Reuters.
In addition, NAND and DRAM prices also plummeted in the fourth quarter due to lack of demand for products that would end up in things like PCs.
Asia’s fourth most valuable listed company’s operating profit likely fell to KRW 5.9 trillion (around Rs 4 lakh) in the October-December quarter, according to a Refinitiv SmartEstimate by 21 analysts. added the Reuters report.
“The main reason for the performance is … a sharp drop in demand,” said Hana Financial Investments analyst Kim Roko. It is expected,” he said.
Analysts at Macquarie Research forecast Samsung’s operating profit for the fourth quarter to be KRW 5.5 trillion, the lowest since the third quarter of 2016. Analysts at Daiwa Capital Markets expect operating profit to reach KRW 4.9 trillion. , a 65% year-over-year drop, the lowest since the fourth quarter of 2015, said a CNBC report.
As a reminder, Samsung recently licensed 5G technology from Chinese tech giant Huawei. Huawei was forced to launch smartphones with its own HarmonyOS operating system after sanctions imposed barred US supplies from accessing his chain. Oppo also licenses key technology from Huawei.