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Samsung's Q4 Profit Plunges 69% as Chip Prices Drop

Samsung Electronics, South Korea's largest firm, announced on Friday that it expects its operating profit to have fallen by at least 69% in the fourth quarter due to a decline in memory chip prices and weaker demand for electronics amid economic uncertainties.

Samsung Logo
Samsung Logo

According to a preliminary estimate, the company's consolidated operating profit for Q4 2022 decreased to KRW 4.3 trillion ($3.4 billion) from KRW 13.87 trillion in the same quarter of 2021 and KRW 10.85 trillion in Q3 2022. Total sales also slipped to approximately KRW 70 trillion from 76.57 trillion in 2021. A more detailed results briefing will be released later this month.

Weaker Demand for Smartphone Components Contributes to Samsung's Q4 Profit Drop

The significant drop in Samsung's profits can be attributed to weakening economic conditions worldwide, which have led to decreased demand for the company's memory chips and other smartphone components. One of Samsung's major buyers, iPhone maker Apple, has faced production delays due to COVID-19 disruptions in its Chinese suppliers, leading to lower sales for Samsung. In addition, a recent report indicated that Apple plans to reduce production due to sluggish demand and supply chain disruptions in China.

In contrast to the chip shortage and resulting high prices for electronic components during the COVID-19 pandemic, which prompted increased production by major manufacturers, Q4 2022 saw a reversal of this trend.

Rising inflation and a slowdown in economic growth prompted several major companies to cut spending and production, leading to a decline in chip sales and overall exports for South Korea. In early trading, Samsung's shares were flat, while the KOSPI index rose 0.6%.