News
Samsung Electronics Q1 operating profit dropped by 95.5%
Samsung has recently revealed the financial results of the first quarter of this year, 2023. However, the company hasn’t performed well in this quarter and has seen a nearly 95% decline in operating profit. Informatively, the company has gained Quarterly revenue of KRW 63.75 trillion and an operating profit of KRW 0.64 trillion in 1Q23. It seems that this decline is because of weak demand in the Memory Business maybe.
Let us tell you, this is the lowest operating profit of Samsung since the quarter 1st of the year 2009. Not only that, but the difference in KRW from USD, Euro, and other currencies has also made a negative impact ( 0.7 trillion KRW) on the company’s wide-operating profit. In the first quarter, Samsung’s total capital expenditure was 10.7 trillion KRW, of which 9.8 trillion KRW was for Semiconductors and 0.3 trillion KRW for Displays.
However, the good thing is the company is expecting semiconductor demands to grow in the 2nd half of the year 2023. Notably, Samsung’s DS Division DS Division posted KRW 13.73 trillion in consolidated revenue and KRW 4.58 trillion in operating losses. If major hyper scalers invest more conservatively in servers, and the customers continue their demands, a limited demand recovery is possible in the memory Business.
As customer inventory levels have declined since the second half of last year (due to inventory adjustments), the demand is expected to recover in the second half of this year. The company will also put some effort into improving the self-build demand by launching new smartphones and PC promotions. On top of that, due to the expansion of new CPU adoption, the portion of DDR5 for servers is also expected to increase.
Besides, Samsung’s MX and Networks businesses posted KRW 3.94 trillion in operating profit and KRW 31.82 trillion in consolidated revenue. The overall smartphone market fell in terms of demand, but still, the premium market has grown from the previous year. Hence, the MX Business recorded higher sales in this quarter as compared to the previous quarter, which also led to a double-digit improvement in profitability.
Samsung Quick Share: An Ultimate file sharing app for Galaxy devices
Let us tell you, the latest Galaxy S23 series, specifically the top-notch Ultra model, played a huge role in the positive first-quarter performance. The Networks Business has seen a revenue decline which is expected to recover in the second half of this year. The recovery will particularly be seen in the low-to-mid segment, which can also help to increase the quarterly market volume.
By looking at the Galaxy S23 series’ strong sales, the MX Business will focus on it while increasing marketing for its foldable phones. It will also focus on the Galaxy A34 and A54 devices due to their mass-marketing demand. Just like the 1st quarter, the premium segment will grow in the second half as well. Besides all of these, Samsung’s other businesses, including Displays, Smart TVs, and Cameras, will also affect operating profit.
It will be interesting to see how the company works to overcome this profit decline. One thing is clear, Samsung is not going to sit aside; instead, it will work its hard to recover the loss.