Samsung: Q4 2022 likely to show lowest profits in 6 years
A 58% decline in quarterly profit is expected by Samsung in Q4 2022. If so, the results will be the lowest in 6 years, spurred on by the worldwide economic downturn, which has led to a drop in consumer demand for electronic devices and a lack of clarity for memory chip manufacturers.
Both spending and investment are decreasing because of high - growing – inflation and growing interest rates. Memory chip orders are on the decline, and smartphone prices are down. Samsung is slated to announce preliminary numbers on Friday, January 13, and then the finalized results by the end of January, which should be a good predictor of global trends.
Many analysts agree that the fourth most valuable listed company in Asia will probably show a USD 4.8 trillion operating profit for Q4 2022. It’s the lowest number since Q3 2016, and an over 50% loss from the corresponding quarter a year ago.
While chips typically account for about half of Samsung’s profits, the company’s operating profit for its chip sector is said to be down 78% in Q4 2022.
Prices are on a major downward turn: i.e., NAND flash chips lost 14% of their price, while some DRAM chips (used mostly in PCs and smartphones) are down 40% YoY. The memory downcycle may last at least until the latter half of 2023, and its further prospects are still fuzzy.
Samsung may very well use its reserve funds to grow its market share and invest in the future memory chip market rebound. The company claimed not to be significantly altering its 2023 investment plans, and its cash balance as of end of Q3 2022 was approximately USD 104 trillion.
The company’s mobile business will also likely see shrinking profits in Q3, as the expectations are for a 14% drop to USD 1.9 trillion. Handset shipments in Q3 are probably in the vicinity of 63 million (62 million of the units are smartphones). In Q4 2021, 72 million handsets were shipped.
Samsung shares experienced a significant 29% drop in 2022, but rebounded in the very beginning of January 2023 on the news of South Korea’s plans to introduce tax breaks for semiconductor investments.