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Samsung reports 95 percent profit drop in the first quarter 2023
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 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.