Samsung today announced first quarter 2023 earnings results, confirming a huge 95 percent operating profit decline. Earlier, the company published a document estimating a sharp drop in profit, which is now detailed in the final results, blaming the chip business.
The South Korean tech giant disclosed that its operating profit fell to 640 billion won ($478.6 million) for the first quarter, down 95 percent from last year’s 14.12 trillion won and the lowest profit for any quarter in 14 years. Its revenue dropped 18 percent to 63.7 trillion won.
Samsung’s chip division reported a 4.58 trillion won loss compared to a 8.45 trillion won profit a year earlier.
Samsung First Quarter 2023 Profit & Results
DS Division: Sales KRW 13.73 trillion, operating profit -4.58 trillion
In the case of memory semiconductors, demand for DRAM was sluggish due to high inventories at customers such as servers. In the case of NAND flash, despite weak server and storage demand, bit growth exceeded market expectations by actively responding to the demand for high-density products.
System LSI’s performance declined as demand for major products such as SoC (System on Chip), sensor, and DDI (Display Driver IC) decreased sharply due to sluggish demand in major applications such as mobile and TV.
The foundry’s earnings declined as demand contracted due to the global economic downturn and orders decreased due to increased inventories of customers.
Device eXperience Division: Sales KRW 46.22 trillion, operating profit KRW 4.21 trillion
Despite the negative growth in the market, MX (Mobile eXperience) saw an increase in sales QoQ and a profit rate of more than double digits thanks to strong sales of the Galaxy S23 series.
In addition, thanks to process operation efficiency, the operating profit of the flagship, A series, tablet greatly improved, contributing to the performance.
Network sales declined mainly in major overseas markets such as North America and Southwest Asia.
VD’s profitability improved both quarter-on-quarter and year-on-year by focusing on premium TV sales and reducing operating costs amid contracting TV market demand due to the off-season and global economic downturn.
Household appliances recorded earnings at the same level as the previous quarter due to sluggish demand and continued cost burden.
SDC: Sales KRW 6.61 trillion, operating profit KRW 0.78 trillion
Although earnings declined due to a contraction in the market for small and medium-sized panels, it maintained its market leadership in the premium market thanks to the expansion of foldable models and strong sales of flagships. In the case of large panels, losses eased with the launch of new QD-OLED products.
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Samsung Teams Up with Tech Titans for Arm’s IPO Amid Valuation Shuffle
A new report reveals that Samsung will participate as an anchor investor for Arm’s upcoming IPO after taking a conservative approach to the matter due to a perceived overvaluation and regulatory risk.
Samsung opted to make an investment in the chip designer, joining a slew of other industry players including Apple, Nvidia and Intel. Amazon, which was earlier rumored to be participating in the IPO, decided to step out.
It’s worth mentioning that the strategic investors have agreed to invest between $25 million and $100 million each. The specific amount for each company hasn’t been disclosed yet.
This means the offering price will come in between $47 and $51 per share. It makes Arm’s valuation between $50 billion and $55 billion, down from the initial estimation of $64 billion.
Arm’s IPO on Nasdaq, which is expected in September, is considered to be the biggest IPO deal of the year. The company controls a majority of the world’s application processor market, designing and licensing basic blueprints for chips.
Samsung vs Apple: The Epic Battle for Smartphone Supremacy in 2023
Market research firm TrendForce published the latest report on their analysis. The agency disclosed that after global smartphone production dropped by nearly 20% year-on-year in the first quarter, production continued to decline by about 6.6% in the second quarter, to 270 million units.
In particular, the global smartphone production in the first half of 2023 was 520 million units, a 13.3% decline compared to the same period last year. Both individual quarters and the first half of the year in total set a ten-year low.
TrendForce analysts pointed out that there are three reasons for the sluggish production performance:
- First, the lifting of epidemic prevention restrictions did not drive demand as expected;
- Secondly, the demographic dividend effect of the emerging Indian market has not effectively exerted its advantages;
- Thirdly, in 2022, brands will be deeply affected by excessive channel inventory. It was originally expected that as inventory is reduced, brands will return to production levels.
However, now affected by economic weakness, people’s consumption willingness is more conservative, resulting in poor production performance in the first half of the year. expected.
Second Quarter Market
In the second quarter, Samsung still topped the list, with Q2 output reaching 53.9 million units, a decrease of 12.4% from the previous quarter. The same period coincided with the replacement of old and new Apple models, with output of 42 million units, a decrease of 21.2% from the previous quarter.
Adding to this, the most obvious change in the smartphone market was Transsion (including TECNO, Infinix, and itel). Transsion surpassed vivo and entered fifth place in the world for the first time. Its output increased by more than 70% month-on-month to 25.1 million units.
In addition to Samsung and Apple, Xiaomi (including Xiaomi, Redmi, and POCO) produced approximately 35 million units in the second quarter, an increase of 32.1% from the previous quarter.
OPPO (realme, and OnePlus included) produced about 33.6 million units in the second quarter, an increase of 25.4% from the previous quarter. Q3 is expected to have a growth rate of about 10-15%, closely following Xiaomi.
Samsung gears up to dominate the booming GDDR market amid global gaming surge
Samsung and SK Hynix are strengthening their foray into the GDDR (Graphic Double Data Rate (GDDR) market amid the global gaming surge. The companies appear to be preparing to lead the GDDR market while gaining technological advantage in next-generation products.
Recently, IGI (Industry Growth Insights) published its new report citing that the GDDR market will grow from $3.2 billion in 2018 to $4.8 billion in 2030 with an average annual growth rate of 7.6%. It’s predicted that high-performance GDDR like GDDR6 will record a double-digit growth rate every year.
Samsung x GDDR
In July, Samsung Electronics developed GDDR7, the industry’s most advanced product, for the first time, and supplied samples to Nvidia for verification for next-generation system installation. SK Hynix also plans to complete GDDR7 development within this year.
On the other hand, Micron plans to introduce GDDR7 in the first half of next year, a step later. In this situation, Nvidia, the world’s largest customer in the GPU market, is known to preferentially review Samsung Electronics’ products instead of Micron’s next-generation products.