Business
Samsung profit could hit 14 years low with a huge 92 percent drop
Samsung Elec’s profit in the first quarter of 2023 is reported to have dropped 92 percent, hitting the lowest for any quarter in 14 years. Since the company is facing huge losses in its most precious chip business, the global economic slowdown further drops profits.
The recently launched Samsung Galaxy S23 series is said to have boosted first-quarter profit, but it can’t fill the gap vacant by the semiconductor business. Samsung’s chip division likely reported quarterly losses of over $2.3 billion as memory chip prices fell and inventory values were slashed.
This Friday, the South Korean tech giant is expected to announce the preliminary first-quarter results, while full results could release later this month. Operating profit likely fell to 1.08 trillion won in the quarter that ended March 31, according to a Refinitiv SmartEstimate from 27 analysts.
The data compiled by the company suggest that it is the lowest since a 590 billion won profit in the first quarter of 2009, which compared with an operating profit of 14.12 trillion won last year. If the study becomes true, Samsung’s various business divisions may face pressure.
Per TrendForce data (via Reuters), prices of DRAM memory chips, widely used in smartphones, PCs, and servers dropped about 20% during the first quarter of this year, while prices for NAND flash chips used in data storage fell about 10% to 15%.
Back in February, the company disclosed that it planned to borrow 20 trillion won from Samsung Display to use as operational funds until August 2025. However, estimates show that Samsung’s mobile business could drop by 9% to 3.46 trillion won in the March quarter.
While demand for smartphones is sluggish overall, premium models are more resilient. Profits were supported by high-end flagships such as the recently launched Galaxy S23 series, which accounted for about 20% of total sales, said IBK Investment & Securities analyst.
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Samsung ranked first in market share in the global smartphone market in Q3, 2023. TrendForce report says that Samsung led the global Q3 smartphone market, recording a market share of 19.5%.
Overall production in the third quarter increased by 11.5% compared to the previous quarter to 60.1 million units. During the same period, Apple’s production increased by 17.9% to 49.5 million, thanks to iPhone 15.
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Third place was taken by Xiaomi (13.9%), followed by Oppo (12.6%) and Transion (8.6%). 6th place is Vivo (8%). Meanwhile, global smartphone production reached 308 million units, a 13% increase compared to the previous quarter and a 6.4% increase from the previous year.
Huawei’s re-entry into the flagship smartphone market targeting Apple has had a significant impact in China. Huawei is aiming to expand its high-end flagship series, focusing on the Chinese domestic market next year, so Apple “We plan to attack directly”.
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In Q3 2023, Samsung and Apple’s market share slightly declined, while an underdog Chinese phone brand appeared on the top 5 chart. In a recent development, Canalys published market research data for the third quarter, revealing Tanssion as the fifth best-seller globally.
According to the info, Samsung and Apple lead total sales with 20% and 17% market share, yet both have fallen from their 22% and 18% levels in 2022. However, Tanssion, the maker of Tecno, Itel, and Infinix phones, climbed from 6% global market share last year to 9% in 2023, a 50% jump.
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Apart from this, Xiaomi matched last year’s share only by “recovering” from a terrible first half of 2023. At the same time, OPPO has fallen steadily over the past two years, while fellow BBK brand vivo lost the top-5 slot it’s owned for years.
Overall, the global smartphone market underwent a slight drop of 1% in Q3 2023. Bolstered by regional recoveries and new product upgrade demand, the smartphone market recorded a double-digit sequential growth in Q3, ahead of the sales seasons.
Recently, research agency Counterpoint Research published their latest analysis. The report reveals that Samsung continued its leadership in the third quarter of 2023, while Apple remained in the second spot. However, both OEMs faced a decline of 1 percent year over year.
According to CR, slower consumer demand is the main factor in the dwindling sales. The market did see a slight 2 percent growth in Q3 compared to Q2, likely driven by last month’s iPhone 15 series launch. Samsung secured 20 percent market share, while Apple grabbed 16 percent sales.
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The Galaxy A-series was the key driver for the South Korean smartphone maker. Apple came in second with 16 percent of the market while Xiaomi rounded out the top three with its 12 percent share. Oppo (10 percent) and vivo (8 percent) were the remaining brands in the top five charts.
The newly released iPhone 15 series will help Apple score a lead over Samsung in the fourth quarter of the year. The results will arrive by early next year, and it’s expected that the US phone maker could surpass Samsung. Major camera upgrades and USB-C helped Apple register strong sales.