Samsung’s Quarterly Profit Set to Hit a Six-Year Low, Analysts Say

Samsung’s Quarterly Profit Set to Hit a Six-Year Low, Analysts Say
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Samsung’s quarterly revenue will doubtless plunge 58 % to its lowest in six years as a world financial downturn saps demand for digital units and clouds the outlook for the reminiscence chip trade.

With shoppers and companies decreasing spending and funding within the face of excessive inflation and climbing rates of interest, smartphone makers and different shoppers held again reminiscence chip orders, whereas smartphones bought for much less as demand suffered, analysts mentioned.

Samsung, because the world’s largest maker of reminiscence chips, smartphones and TVs, is a bellwether for international consumption tendencies. It’s anticipated to announce preliminary outcomes on Friday and full outcomes later this month.

Working revenue for Asia’s fourth most useful listed firm doubtless fell to KRW 5.9 trillion (roughly Rs. 40,000 crore) within the October-December quarter, based on a Refinitiv SmartEstimate from 21 analysts.

That may be Samsung’s lowest quarterly revenue for the reason that third quarter of 2016 and compares with an working revenue of KRW 13.87 trillion (roughly Rs. 90,000 crore) a yr earlier.

“The principle motive for the efficiency…is a pointy drop in demand. Each shipments and costs of chips and smartphones are anticipated to fall in need of earlier expectations,” mentioned Kim Roko, analyst at Hana Monetary Funding.

SmartEstimates are weighted towards forecasts from analysts who’re extra constantly correct.

Working revenue for Samsung’s chip enterprise doubtless tumbled by 78 % to KRW 1.9 trillion (roughly Rs. 12,500 crore), a median of seven analyst estimates confirmed.

Chips often account for about half of the tech large’s income.

Costs of some DRAM reminiscence chips, extensively utilized in smartphones and PCs, plunged 40 % over the yr, whereas costs for NAND flash chips, utilized in information storage, fell 14 %, based on TrendForce information.

Reminiscence chip rivals SK Hynix and Micron Expertise have sharply reduce deliberate 2023 investments in response to the reminiscence downcycle, which is predicted to final at the very least till the second half of 2023.

Nevertheless, Samsung is predicted to make use of its deep pockets throughout this downturn to broaden market share by largely sustaining its funding plans, analysts mentioned, so it may be in place to take benefit when the reminiscence chip market ultimately rebounds.

Samsung mentioned in October that it didn’t anticipate a lot change to its 2023 investments. It had about KRW 128.82 trillion (roughly Rs. 8.5 lakh crore) in money as of end-September.

Samsung’s cellular enterprise can be anticipated to see income shrink, with forecasts calling for a 14 % fall to KRW 2.three trillion (roughly Rs. 15,000 crore) for the quarter.

Its handset shipments doubtless reached 63 million within the quarter, together with 62 million smartphones, based on information supplier Counterpoint’s estimate. That compares with 72 million handsets shipped within the fourth quarter of 2021.

Samsung shares fell about 29 % in 2022 earlier than rebounding this week as South Korea introduced deliberate tax breaks for semiconductor investments. That in contrast with a 36 % stoop for the Philadelphia Semiconductor index final yr.

© Thomson Reuters 2023

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