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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