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Samsung has shared its earnings estimates for the first three months of 2023, and the figures are unsightly for its investors and well-wishers. The company is staring at an eye-popping 96 percent year-on-year (YoY) decline in profit in Q1 2023. It is hoping to take home just about KRW 0.6 trillion (roughly $450 million), down from KRW 14.12 trillion (nearly $11 billion) in Q1 2022. Overall consolidated sales revenue for the first quarter of the year is expected to clock in at around KRW 63 trillion (roughly $47 billion).
Samsung reports a massive profit decline in Q1 2023 amid dwindling chip demand
Samsung made truckloads of money in 2021 and started 2022 with a bang. However, midway through last year, the company’s earnings started to decline. A drop in demand for semiconductors, particularly memory chips, severely affected its business.
Since the majority of the Korean firm’s income comes from the semiconductor business, the drop hit where it hurts the most. By the end of 2022, its yearly profits were down 16%. More notably, the Q4 income hit an eight-year low.
In its financial outlook for 2023, Samsung said it isn’t expecting much improvement. The company estimated its earnings from the semiconductor business to be halved this year. While it hasn’t shared its detailed earnings report for the first quarter yet (it will come in April end), early estimates point to a gloomy future.
On average, the world’s largest smartphone maker, which also leads the industry on several other fronts, made just about $150 million in the first three months of 2023. This is its lowest quarterly profit in 14 years (since the 2008 economic recession).
The Korean media recently reported that Samsung will also post its first-ever quarterly loss from the semiconductor business since 2008 in Q1 2023. It could lose about KRW 4 trillion or more than $3 billion from the memory chips unit.
Looking at the company’s earnings estimates, it may have made about as much from all other businesses in the first quarter. Overall, it just about broke even between January and March 2023. We’ll have to wait for the full report to find out where Samsung made the most money this past quarter.
Samsung will not scale back semiconductor investments
Despite losing money from semiconductors, Samsung doesn’t plan to scale back investment. Many rivals have reduced their spending in the business until the market rebounds. But, the Korean firm sees continued investment and innovation as the key to staying afloat in the long term.
It has even borrowed about $16 billion from its sister firm to fund the planned investments. Time will tell whether Samsung reaps the benefits of these investments anytime soon. Stay tuned for its full Q1 2023 earnings report later this month.
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