samsung has revealed a sharp drop in profit for 2022, mainly due to weak demand for its chips and smartphones, which are the company’s main money makers. The Korean tech giant has posted KRW 302.23 trillion (US$245.4 billion) in annual revenue, which is a new record for the company, in its latest earnings report. But it has also reported an operating profit of KRW 43.38 trillion (US$35 billion) for all of 2022, KRW 8.5 trillion (US$6.9 billion) less than the previous year.
“The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” the company explained. While the tech giant’s foundry business posted an increase in profit due to customer and application diversification, its semiconductor business performed poorly overall. There was weak demand for its chips overall as customers adjust and reduce inventory amid economic uncertainties. Its chip prices also fell, likely due to a surplus of unsold inventory, which contributed to lower profits for the business for the year.
In the fourth quarter of 2022, Samsung’s semiconductor business earned KRW 20.07 trillion (US$16.3 billion) in consolidated revenue, but only KRW 0.27 trillion (US$219 million) in operating profit. For comparison, it posted consolidated revenue of KRW 26.01 trillion (US$21.6 billion at early 2022 conversion rates) and an operating profit of KRW 8.84 trillion (US$7.35 billion). ) for the fourth quarter of 2021. Samsung is preparing for this downward trend to persist throughout the coming months, although it expects demand for its semiconductors to increase in the second half of the year.
Similarly, demand for smartphones remained weak in the fourth quarter of 2022. Sales of Samsung’s most affordable phones slowed, and while sales of flagships lagged behind market expectations, they remain being lower than those of previous quarters. The company expects mass-market smartphone demand to weaken further in 2023 “due to persistent macroeconomic conditions.” But since it also expects demand for premium devices to remain strong, it promises to strengthen “the competitiveness of its premium flagship products.” To note, Samsung will be holding its first Unpacked event of 2023 on February 1, where it will likely unveil its next flagship phone, the Galaxy S23.
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