Samsung has revealed A sharp decline in profits for 2022, mainly due to weak demand for its chips and smartphones, which are the company’s main money makers. The Korean tech giant reported annual revenue of KRW 302.23 trillion (US$245.4 billion), a new record in the company’s latest earnings report. But full-year 2022 operating profit of KRW 43.38 trillion (US$35 billion), down KRW 8.5 trillion (US$6.9 billion). from previous year.
“The business environment deteriorated significantly in the fourth quarter due to weak demand amid the global economic slowdown,” the company explained. While the technology giant’s foundry business posted an increase in profits due to customer and application diversification, its semiconductor business performed poorly overall. Overall, there was weak demand for its chips as customers adjusted and reduced their inventories amid economic uncertainty. The price of its chips also fell, largely due to a surplus of unsold inventory, contributing to the business’s decline in annual revenue.
In the fourth quarter of 2022, Samsung’s semiconductor business generated consolidated revenue of KRW 20.07 trillion (US$16.3 billion), but only KRW 0.27 trillion (US$219 million) in operating profit. In comparison, it posted an operating profit of KRW 26.01 trillion (US$21.6 billion at early 2022 exchange rates) and KRW 8.84 trillion (US$7.35 billion) in Q4 2021. Samsung has been pushing for a persistent trend throughout this downward trend. In the next few months, it expects demand for its semiconductors to pick up in the second half of the year.
Similarly, demand for smartphones remained weak in the fourth quarter of 2022. Sales of Samsung’s most affordable phones fell, and while flagship sales were in line with market expectations, they were lower than in previous quarters’. The company expects demand for mass-market smartphones to weaken further in 2023 “due to persistent macroeconomic conditions.” But as demand for premium devices is expected to remain firm, it promises to strengthen “the competitiveness of its premium flagship products”. Note, Samsung does Hold its first Unopened event in 2023 It will launch its next flagship phone, the Galaxy S23, on February 1.
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