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Samsung’s profits plummeted significantly due to surplus inventory

Web Desk

31st Jul, 2023. 12:42 am
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Samsung Electronics’ operating profits fell 95% in the latest quarter.
Despite the challenges, Samsung exceeded analysts’ earnings expectations.
The company’s shares fell after the earnings report was released.

Samsung Electronics witnessed a massive 95% drop in operating profits compared to the previous year’s quarter. This decline was attributed to an oversupply of memory chips, leading to price decreases despite production cutbacks. Despite these challenges, the company managed to surpass analysts’ earnings expectations.

During the quarter ending on June 30, Samsung Electronics achieved sales of $47.2 billion (60.01 trillion Korean won), indicating a 22% decline from the previous year. This figure closely matched the consensus estimates of 60.6 trillion Korean won, as reported by FactSet data.

Samsung‘s operating profit experienced a significant decline, reaching $527.2 million (670 billion Korean won). Surprisingly, this figure exceeded the average expectations of 640 billion Korean won.

Following the COVID pandemic, the South Korean chip maker faced a decrease in demand for memory chips. Manufacturers stockpiled these chips during the pandemic to meet the surge in consumer electronics sales. However, they are now grappling with an oversupply of chips, prompting Samsung to announce a production cut in April.

After Samsung’s earnings report was made public, the company’s shares experienced a 0.7% decrease in Thursday morning trading.

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Recently, Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung Electronics’ main competitor, revealed a 23.3% year-on-year drop in net income, marking its first profit decline in four years. Additionally, TSMC revised its revenue forecast for 2023, indicating a possible prolonged slowdown in the global electronics market despite the rapid growth of AI.

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Samsung’s profits plummeted significantly due to surplus inventory

Web Desk

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