Samsung Earnings: Q1 Profit Drops 95% Due to Weak Memory Chip Demand

The South Korean electronics giant Samsung reported a 95% drop in operating profit for the first quarter of 2023, its lowest level since 2009.

The company’s semiconductor division sells memory chips used in various devices and is its biggest profit driver.

Still, it posted a 4.58 trillion Korean won loss versus an 8.45 trillion won profit in the same period last year.

The decline is attributed to falling prices and weak demand for memory chips as smartphone and PC makers grapple with excess inventories due to rising inflation.

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Samsung’s Q1 Earnings at a Glance

  • Revenue: 63.75 trillion Korean won (~$48 billion USD), down 18% YoY.
  • Operating Profit: 640 billion Korean won (~$479 million USD), down from 14.12 trillion won a year earlier, its lowest level since the first quarter of 2009.

However, Samsung forecasts a recovery in the second half of the year, projecting that customer inventory levels will have declined, leading to a gradual recovery in demand.

The company expects limited demand recovery as large-scale data centers invest more conservatively and customers continue to adjust inventories.

Samsung’s Mobile Division Boosted by S23 Ultra Sales

During the first quarter, Samsung launched its latest line of flagship smartphones called the S23 series, which boosted its mobile division.

As a result, the premium market grew in volume and value despite weak demand caused by macro uncertainties. Samsung reclaimed the top spot globally in terms of smartphone market share, according to data from Canalys.

Samsung’s revenue in its mobile business grew 22% versus the previous quarter to 30.74 trillion won but was down 2% YoY. Operating profit came in at 3.94 trillion won, up 3% YoY, helped by sales of its highest-priced smartphone, the $1,200 S23 Ultra.

Rumors of Samsung Switching Back to Exynos Chips for S24

According to industry sources, the company is rumored to be switching back to Exynos chips for its upcoming flagship smartphone, the S24.

Samsung had previously opted for Qualcomm’s Snapdragon chips for its S23 series, but the company’s latest Exynos 2400 chip has reportedly outperformed Qualcomm’s latest Snapdragon chip in benchmark tests. However, Samsung has yet to confirm the rumors.

All the S23 phones are currently running on the Snapdragon 8 Gen 2 processor. Samsung may face backlash from customers if they decide to discontinue the use of Snapdragon chips in their devices, as many users have expressed their preference for the high-performing chip. It may not be wise for the company to switch to Exynos chips.

Final Thoughts

Samsung’s earnings in the first quarter of 2023 were disappointing due to weak demand for memory chips. Still, the company is optimistic about a gradual recovery in the second half of the year. Sales of the S23 Ultra boosted the mobile division, and rumors of Samsung switching back to Exynos chips for the S24 have sparked interest in the company’s prospects.

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George Tsay

Executive editor in charge of The Droid Guy since 2012. Coordinates a group of more than 10 editors and writers based around the world as they cover the latest and greatest products in consumer technology. Grew up and lives in Southern California. Go Bruins. Go Padres. Go Chargers. Find me on Twitter

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