Samsung says it expects the lowest quarterly profit in 8 years | Technology

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The South Korean tech giant is blaming weak demand for memory chips for a sharp decline in profits.

Samsung Electronics is expecting its worst fourth-quarter profit in eight years amid a sharp decline in global demand for memory chips and smartphones.

Profits are estimated to have fallen 69 percent to 4.3 trillion won ($3.4 billion) in the October-December period, the South Korean tech giant said Friday.

Weak demand for memory chips was “higher than expected as customers switched investments… [by] continued high global interest rates and a weak economic outlook,” Samsung said in a statement.

The preliminary results, which fell well short of estimates, mark Samsung’s smallest quarterly profit since the third quarter of 2014.

The dismal profit estimate by the world’s largest memory chip, smartphone and TV maker – a bellwether for global consumer demand – sets a weak tone for other technology companies’ quarterly results.

“All of Samsung’s businesses had a tough time except for chips and mobile in particular,” said Lee Min-hee, an analyst at BNK Securities.

Rising global interest rates and the cost of living have reduced demand for Samsung’s smartphones as well as the semiconductors it supplies to rivals such as Apple.

“Memory chip prices fell in the mid-20 percent range in the quarter, and high-end phones such as foldables did not sell as well,” Lee said, adding that Samsung’s display business was hurt by production delays. Apple will become the world’s largest iPhone factory in China in the quarter.

Three analysts said they expected Samsung’s profits to dive again this quarter, with operating losses likely for the chip industry as a glut drives decline. another in the prices of memory chips.

Samsung had said in October that it did not expect much change in its 2023 investments.

Samsung has a history of not announcing memory chip production cuts, according to analysts, but could shift investment organically by delaying equipment imports or through other means.

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