Samsung Logs 96% Drop in Q2 Profit Amid Chip Oversupply
Samsung Electronics, the world's leading memory chip and smartphone maker, reported on Friday a likely 96% decline in second-quarter profit — the lowest for any quarter since 2009 — as the chip glut persists despite a supply cut.
Facts
- Samsung Electronics, the world's leading memory chip and smartphone maker, reported on Friday a likely 96% decline in second-quarter profit — the lowest for any quarter since 2009 — as the chip glut persists despite a supply cut.1
- Largely in line with a $427M Refinitiv SmartEstimate, the tech giant estimates that operating gains fell to $458M from April to June, down from $10.8B a year earlier.2
- The breakdown of each division has not been disclosed yet, with analysts estimating the device solutions (DS) division — responsible for the chip business — suffered losses between $2.3B and $3.8B in Q2.3
- In the January-March 2023 quarter, the company reported a massive $3.5B loss in its chip business as memory chip prices fell further and its inventory values were slashed.4
- Meanwhile, other units — mobile eXperience (MX), consumer electronics (CE), and electronics device subsidiary Harman International Industries — are believed to have generated profit for the company.5
- Sales reportedly plunged a larger-than-expected 22% to $46B, with Samsung stock falling 2.4% in Seoul — the most in three months. Full earnings, including net income and details on divisional performance, will be reported at the end of the month.6
Sources: 1CNN, 2Al Jazeera, 3Korea JoongAng Daily, 4Nikkei Asia, 5매일경제 영문뉴스 펄스(Pulse) , and 6Bloomberg.
Narratives
- Establishment-critical narrative, as provided by Global Times. Samsung is among the major international chipmakers facing successive losses mainly due to the reckless US chip export restrictions on China, which is the world's largest single-market consumer of semiconductors. Aimed at containing China's rise, such measures to exclude the PRC from the global semiconductor industry chain have backfired and are hurting global chipmakers, not China.
- Pro-establishment narrative, as provided by Korea Times. Despite Samsung's Q2 profit falling to a 14-year low, this result was much better than market expectations and showed signs that the company will indeed have a six-fold increase to $2.8B in the third quarter as forecast. Additionally, its operating profit is expected to be $3.8B in the fourth quarter, up from $3.3B in Q4 2022. Things are still looking up.
