ALBAWABA – Tech giant Samsung profits plunged in the second quarter of 2023, due to massive losses incurred from weak demand for memory chips, news agencies reported Thursday.
Samsung’s operating profits fell 95 percent, a company statement said.
The company reported $525.3 billion in operating profits in the period from April to June, down from $11 billion a year before, Al Jazeera reported.
Meanwhile, the downturn in the semiconductor market has incurred a record $7 billion in losses from the South Korean company’s bread-and-butter chip business, according to Reuters.
Samsung’s second-quarter net profit fell 84.5 percent to $1.35 billion, and sales dropped 22.3 percent to $47 billion, as reported by CNBC.
This marks the firm's worst quarterly profit since the first quarter of 2009, according to Agence France-Presse (AFP).
Production cuts to continue as Samsung profits drop
Due to sharply declining Samsung profits, the company announced it will extend production cuts because a demand recovery is largely constrained to high-end chips used in artificial intelligence.
However, despite weak demand, the firm offered an optimistic outlook for the remainder of the year.
"Global demand is expected to gradually recover in the second half of the year, which should lead to an improvement in earnings driven by the component business," it said in the statement.
However, "continued macroeconomic risks could prove to be a challenge", the company said.
Company shares up despite Samsung profits crashing
Samsung's shares were trading 2.29 percent higher on Thursday afternoon, as reported by AFP.
The company is likely to remain in the red in the current quarter, although losses are likely to halve to $1.79 billion, compared to the second quarter, according to 22 analysts polled by Refinitiv, via Reuters.
Samsung has also been grappling with a prolonged slump in the global smartphone market, which contracted by 11 percent in the second quarter from a year earlier, according to industry data provider Canalys, as reported by AFP.
Note: all of the aforementioned news agencies miscalculated the values and figures in US dollars. AlBawaba was able to run its own calculations using Google’s Finance tool.
