Samsung Electronics has cautioned about a steeper-than-anticipated decline in profits. The technology powerhouse foresees a more than 30% drop in its profits for the final quarter of 2023, a figure significantly worse than what analysts had predicted. This downturn coincides with ongoing global weakness in consumer electronics demand.
As the foremost producer of memory chips, smartphones, and televisions globally, South Korea’s Samsung is gearing up to unveil its detailed financial report on January 31st.
In specifics, Samsung approximates its operating profit for October-December 2023 to have plummeted to 2.8 trillion won ($2.13 billion; £1.76 billion), marking a 35% decline from the same period in 2022. This figure is notably below the expected 3.7 trillion won forecasted by industry analysts.
The surge in demand for electronic devices and memory chips amid the COVID-19 lockdowns gradually gave way to a sharp decline in memory chip prices throughout last year. Factors contributing to this downturn include a surplus of essential electronic components after the pandemic and sluggish sales of laptops and mobile phones.
This ongoing trend severely impacted Samsung’s earnings, witnessing a staggering 77% drop in operating profit for the third quarter of 2023 compared to the previous year. In the quarter before that, profitability plunged by an even more alarming 95%, prompting Samsung to curtail its planned memory chip production.
The company announced its intention to notably reduce memory chip production, particularly for products with already secured supply, in response to these challenging market conditions.
Samsung’s recent caution coincides with the commencement of CES, the premier global consumer technology trade show held in Las Vegas, attracting over 130,000 visitors and featuring around 4,000 exhibitors. This event not only showcases cutting-edge innovations but also serves as an annual congregation for the tech industry’s major players.