Daiwa Securities Capital Markets CEO SK Kim said Samsung may benefit from US demand.
The past year was challenging for Samsung Electronics, as its semiconductor chip business experienced a downturn, stretching to Q2 2023. Tough time is eating into the South Korean company’s profits deeply as it generates most of its revenue from its chip business. With the current situation, Samsung released an alarming profit estimate for the second quarter of 2023, which confirms the continued weak demand for memory chips. Many companies stockpiled memory chips during the pandemic as there was a surge in consumer devices. However, these companies are now facing an overabundance of chip investors amid rising inflation, which is causing consumers to spend less on electronics. This drove down the price of memory chips.
In the second quarter of 2023, Samsung expects quarterly sales to be around KRW 60 trillion (about $45.91 billion). It also said operating profit could reach 0.6 trillion Korean won, about $459 million. Previously, it recorded KRW 14.1 trillion in the same period last year. This means that the manufacturer is about to record a profit decline of 95.74% compared to the same quarter in the previous year. Also, this will be the second consecutive quarter that the electronics company has reported weak numbers. Earnings in the first quarter of 2023 were down 96% year over year.
Samsung is on the verge of posting its lowest quarterly profit in 14 years with forecasts for the second quarter of 2023. This forecast matches analysts’ forecasts for a profit of KRW 555 billion. According to the company’s previous earnings data, the last time it posted such low numbers was in the first quarter of 2009. In addition, Samsung’s revenue forecast for the second quarter is KRW 63.75 trillion. The company generated $77.2 trillion in revenue last year. This means that second quarter revenue could decline 17.4% year over year.
Daiwa Securities Capital Markets CEO SK Kim weighed in on the current market situation for semiconductor chips.
Demand remained weak. But the key now is saving (memory chips). Samsung Electronics announced a significant production cut in early April, so we expect (it) in the third quarter … However, we assume that prices can rebound at the end of this year or early next year, the expert said.
While Kim indicated that Samsung may benefit from US demand, he also noted weak demand from China.
Coinspeaker hinted that Samsung Electronics could see a massive decline in the second quarter of 2023. The report linked sluggish sales to the unhappy performance of its chip division, which has been the main source of profits for the company. Samsung shares fell more than 2% in Friday morning trading.
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Ibukun is a crypto/financial writer interested in passing on relevant information, using uncomplicated words to reach all types of audiences. Apart from writing, she loves watching movies, cooking, and exploring restaurants in the city of Lagos where she is staying.
