Worsening global economic conditions are crippling especially high-tech companies. According to the results of the first quarter of the year, Samsung reported that it experienced record losses.
The global slowdown in semiconductor purchases amid economic slowdown and corporate austerity led to a decline in chip prices in the first quarter, triggering industry-wide production cuts. With most of its income coming from semiconductors, Samsung has been radically affected. The firm’s operating profit in the first quarter fell 95 percent.
Profit Dropped 95 Percent
Samsung shared its financial data for the first quarter of 2023. The firm had already announced that it was expecting a tough quarter a few weeks ago, and the expectations came true. The tech giant reported an operating profit of only $477 million while generating $47.5 billion in revenue. This is due to record losses in the semiconductor business. Samsung’s DS division, which handles its semiconductor and display businesses, reported consolidated revenue of $10.2 billion. This segment generated an operating loss of $3.4 billion in the first quarter.
Despite the loss in profits overall, Samsung’s mobile division performed well in the first quarter. The company’s MX and Networks divisions, which cover both mobile devices and telecommunications network equipment, generated $23.7 billion in revenue and $2.9 billion in operating profit. This value represents an increase of 12 percent compared to the previous year, which has already been the only segment that has increased its revenues from the MX side.
Thank you Galaxy S23
Samsung has announced that the premium device market is growing year-over-year, despite the low demand for smartphones in general. The division’s positive performance was apparently driven by strong sales of the Galaxy S23 series, particularly the Galaxy S23 Ultra. In the future, the company’s MX division will focus on supporting sales of the Galaxy S23, while boosting the marketing of its foldable phones. Samsung is expected to introduce its next foldable devices in the second half of the year, possibly in August.
Samsung is hopeful for the future, while achieving its lowest profit in any quarter of the last 14 years. Samsung announced earlier this month that it will cut down on chip production, joining smaller competitors like SK Hynix. Samsung says that although it expects a slight recovery in the second quarter, the decline will continue. In the second half of the year, it is stated that the arrows will rise again as the stocks melt and the demand revives.