Samsung Electronics announced a 95% year-on-year drop in operating earnings for the fourth quarter due to an oversupply of memory chips, which caused prices to fall despite production cuts. Nonetheless, the corporation was able to outperform analysts’ earnings forecasts.
For the fiscal quarter ended June 30, the corporation reported sales of $47.2 billion (60.01 trillion Korean won), a 22% decline from the previous year. According to FactSet statistics, this is quite close to the consensus expectation of 60.6 trillion Korean won.
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Samsung’s operating profit fell precipitously to $527.2 million (670 billion Korean won). Despite this, the amount exceeded the average forecast of 640 billion Korean won.
The South Korean chipmaker has been dealing with a post-Covid drop in memory chip demand. This is because manufacturers hoarded these chips throughout the epidemic in order to cater to increasing consumer electronics purchases, but now find themselves with an excess of semiconductor stocks. As a result, Samsung announced a manufacturing cut in April.
Following the release of Samsung’s earnings, shares fell 0.7% in early Thursday trading.
Taiwan Semiconductor Manufacturing Co (TSMC), Samsung Electronics’ main competitor, announced a 23.3% yearly reduction in net income last week, the first drop in profits in four years. In addition, the company reduced its revenue forecast for 2023, implying that the global electronics sector may face a prolonged recession, despite recent improvements.
