Samsung’s profits drop by a staggering 95% as a result of weak semiconductor demand

Over the past year, the semiconductor industry is undergoing less demand and supply issues. The global economic conditions have impacted the revenues and profits of the semiconductor companies. When it comes to Samsung, the same is the case here. The semiconductor division of the company is considered the biggest cash cow. Over the past year, low profits and revenues have impacted the company badly.

Today, Samsung released its Q1 2023 financial results, which were consistent with its earlier guidance. In comparison to the same period last year, Samsung Electronics’ operational profit has decreased by 95%. In 14 years, Samsung has never had a quarter with a smaller profit.

In Q2 2023, things might only slightly get better

This previous quarter, Samsung reported revenue of KRW 63.75 trillion ($47.6 billion), an 18% decrease from KRW 77.8 trillion ($61.19 billion) in Q1 2022. 640 billion Korean won, or approximately $478.55 million, represents a sharp 95% decrease from KRW 14.12 trillion, or around $11.10 billion, during the same time period in 2022.

Less demand for chip products is the main reason behind such staggering profits.  Its semiconductor segment reported a quarterly loss of 4.58 trillion won ($3.41 billion), as demand for chips significantly decreased and the cost of memory chips dropped over the previous nine months by almost 70%. Given the current situation, the company has no hope for conditions to improve in the current quarter. However, some forecasts predict that things might start getting slightly better by the third quarter. In this way, it would contribute to a nominal earnings recovery.

In contrast, the mobile division of Samsung has shown better performance. Its revenue has increased by 22% in contrast to the previous quarter. It has reported an operating profit up 3% as of Q1 2022. Well, such improved figures are the result of good sales of the flagship Galaxy S23 series.