[ad_1]
Samsung‘s semiconductor business division has been having a tough time in the market lately. A decline in demand and prices for memory chips has severely affected its income. The South Korean media has now shared some numbers to put the company’s semiconductor struggles into perspective. According to KoreaJoongAngDaily, Samsung suffered a loss of KRW 3 trillion (approx. $2.3 billion) from its memory chip business in the first two months of 2023.
The new report goes on to add that the Korean tech biggie may not be able to return to profitability in March as well. Industry experts are anticipating its memory chip unit to lose another KRW 1 trillion this month. That would take its total losses for the first quarter of the year to over KRW 4 trillion, or more than $3 billion. The loss is too big for the other semiconductor units to offset it. After all, Samsung has never been the biggest player in the foundry market. Memory chips have always been its crown jewels.
Overall, Samsung’s loss from the semiconductor division in Q1 2023 could be around KRW 2 trillion, the report states. What’s more alarming is that the business hasn’t posted a quarterly loss since the fourth quarter of 2008 when the entire industry suffered from a global economic crisis. The economic environment hasn’t been the best in recent years too, but Samsung’s heady dependency on memory chips may hit its income hard this year. A large chunk of its yearly profits come from memory chips, a market it has led for several years now.
In 2022, Samsung reported an operating profit of KRW 43.4 trillion. Almost 55 percent (KRW 23.8 trillion) of that came from the semiconductor business with memory chips raking in most profits. However, the memory market declined sharply towards the end of the year. After making KRW 8.5 trillion, KRW 9.9 trillion, and KRW 5.12 trillion in the first three quarters of the year, Samsung only made KRW 270 billion from semiconductor sales in the final quarter. That’s because the average price of memory chips dropped by around 75 percent.
Samsung recently borrowed money to fund its investments in the chip business
Market analysts are forecasting a continued decline in memory prices throughout 2023. No wonder Samsung is seeing its semiconductor profits drop by almost 50 percent this year(to around KRW 13 trillion). Samsung Electronics, which houses the semiconductor and smartphone businesses, recently borrowed around $16 billion from its sister firm Samsung Display to fund its semiconductor investments as it braces for a massive profit decline. It plans to maintain the level of investment as part of its long-term business strategy.
[ad_2]
Source link