Samsung's Quarterly Profit Could Hit Six-Year Low as Consumers Cut Spending, Analysts Say

Samsung's quarterly nett volition apt plunge 58 percent to its lowest successful six years arsenic a planetary economical downturn saps request for physics devices and clouds the outlook for the representation spot industry.

With consumers and businesses reducing spending and concern successful the look of precocious ostentation and climbing involvement rates, smartphone makers and different clients held backmost representation spot orders, portion smartphones sold for little arsenic request suffered, analysts said.

Samsung, arsenic the world's biggest shaper of representation chips, smartphones and TVs, is simply a bellwether for planetary depletion trends. It is expected to denote preliminary results connected Friday and afloat results aboriginal this month.

Operating nett for Asia's 4th astir invaluable listed institution apt fell to KRW 5.9 trillion (roughly Rs. 40,000 crore) successful the October-December quarter, according to a Refinitiv SmartEstimate from 21 analysts.

That would beryllium Samsung's lowest quarterly nett since the 3rd 4th of 2016 and compares with an operating nett of KRW 13.87 trillion (roughly Rs. 90,000 crore) a twelvemonth earlier.

"The main crushed for the performance...is a crisp driblet successful demand. Both shipments and prices of chips and smartphones are expected to autumn abbreviated of erstwhile expectations," said Kim Roko, expert astatine Hana Financial Investment.

SmartEstimates are weighted toward forecasts from analysts who are much consistently accurate.

Operating nett for Samsung's spot concern apt tumbled by 78 percent to KRW 1.9 trillion (roughly Rs. 12,500 crore), an mean of 7 expert estimates showed.

Chips usually relationship for astir fractional of the tech giant's profits.

Prices of immoderate DRAM representation chips, wide utilized successful smartphones and PCs, plunged 40 percent implicit the year, portion prices for NAND flash chips, utilized successful information storage, fell 14 percent, according to TrendForce data.

Memory spot rivals SK Hynix and Micron Technology person sharply chopped planned 2023 investments successful effect to the representation downcycle, which is expected to past astatine slightest until the 2nd fractional of 2023.

However, Samsung is expected to usage its heavy pockets during this downturn to grow marketplace stock by mostly maintaining its concern plans, analysts said, truthful it tin beryllium successful spot to instrumentality vantage erstwhile the representation spot marketplace yet rebounds.

Samsung said successful October that it did not expect overmuch alteration to its 2023 investments. It had astir KRW 128.82 trillion (roughly Rs. 8.5 lakh crore) successful currency arsenic of end-September.

Samsung's mobile concern is besides expected to spot profits shrink, with forecasts calling for a 14 percent autumn to KRW 2.3 trillion (roughly Rs. 15,000 crore) for the quarter.

Its handset shipments apt reached 63 cardinal successful the quarter, including 62 cardinal smartphones, according to information supplier Counterpoint's estimate. That compares with 72 cardinal handsets shipped successful the 4th fourth of 2021.

Samsung shares fell astir 29 percent successful 2022 earlier rebounding this week arsenic South Korea announced planned taxation breaks for semiconductor investments. That compared with a 36 percent slump for the Philadelphia Semiconductor scale past year.

© Thomson Reuters 2023

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