2023-10-31 05:23:05
Seoul (awp/afp) – South Korean tech giant Samsung Electronics announced on Tuesday a 37.7% decline in its net profit in the third quarter compared to the same period the previous year, despite the release of new phones that boosted its sales.
The company’s net profit stood at 5.84 trillion won ($4.3 billion) from July to September, compared to 9.39 trillion won ($6.7 billion) over the same period in 2022.
However, it more than tripled compared to 2Q 2023.
Samsung Electronics also reported 3Q operating profit of 2.4 trillion won ($1.7 billion) on strong sales of flagship mobile models and strong demand. screens”. This represents a fall of 77.57% year-on-year.
The group declared at the beginning of October to expect a drop of 77.9% in its operating profit due to weak global demand for semiconductors.
Although down sharply compared to 2022, this figure is well above the operating profit of the first quarter (640 billion won, the lowest since 2009) and the second quarter (670 billion won).
Its turnover amounted to $50 billion over the period, compared to $57 billion last year, a drop of 12%.
Samsung Electronics is the world’s largest smartphone maker and the flagship subsidiary of the Samsung Group, by far the largest of the family empires that dominate the South Korean economy.
The company explained that “system semiconductor profits were affected by a delay in the recovery of demand for key applications.”
The income of its professional network branch has “declined in the main foreign markets, as mobile operators have reduced their investments”.
The South Korean giant, however, hopes for better conditions in the chip sector in 2024, even if “macroeconomic uncertainties are expected to persist”.
“Demand for servers for generative artificial intelligence, high-density and high-end products remained strong” compared to that for conventional servers, the group said.
AI and hyperconnected experiences
It plans to “expand its AI offerings, enable personalized hyperconnected experiences through SmartThings, and secure technologies in new areas.”
Liz Lee, associate director of research firm Counterpoint, said the results were “better than expected.”
They can be explained, according to her, by “the reduction in losses linked to chips and the solid performance of the mobile devices and screens sectors”.
“The losses suffered by semiconductors were offset by the MX (Mobile experience) and SDC (development) branches thanks to the launch of new Samsung smartphones and SDC’s client, Apple,” she explained.
However, “Samsung might not avoid the shock of the prolonged decline in memory chip prices. The situation has not fully recovered in the chip industry, hit by weakening consumer demand for technology gadgets amid soaring inflation and rising interest rates.
South Korean processor makers – led by Samsung – had posted record profits in recent years thanks to rising prices and booming demand for computers and smartphones during the Covid-19 pandemic.
But the trend reversed following the crisis and due to the global economic slowdown.
Samsung notes, however, that it is likely that demand will start to rise once more in 2024, supported by “replacement cycles of products sold during the initial phase of the pandemic”, notably smartphones and computers.
In April, Samsung announced a significant reduction in its production of memory chips, following the example of its rivals SK Hynix and Micron.
Tuesday’s results come weeks following Washington authorized Samsung and SK Hynix, the world’s second-largest semiconductor maker, to export American semiconductors and technology components to South Korean factories in China.
The American administration last year imposed restrictions on exports to China of these American products, deeming them crucial to preserve its national security.
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