Samsung Surprised By Slow Demand, Expects Significant Drop In Profit
High inflation worldwide has slowed demand for semiconductors and smartphones, Samsung Electronics' two main revenue generators. It has announced that it is expecting its operating profit for the fourth quarter of 2022, to drop by 70%.
According to Nikkei Asia, The South Korean technology giant blamed the disappointing result on weak memory chip and smartphone demand.
"For the memory business, the decline in the fourth quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances, spurred by concerns over deteriorating consumer sentiment," the company said in a statement. "Profits from the mobile experience business declined as smartphones sales and revenue decreased due to weak demand resulting from prolonged macro issues."
The world's largest memory chip and smartphone maker's bad performance comes as experts expect several nations will enter recession this year. On Sunday, International Monetary Fund Managing Director Kristalina Georgieva predicted that one-third of the globe will be in recession and even hundreds of millions of people in countries that are not in recession would feel like they were.
Samsung will release its full earnings for the fourth quarter of 2022 and will be explaining the poor performance to its investors later this month.