Samsung profits plummeted significantly Due to Excess Inventory

Samsung Electronics reported a dramatic 95% year-on-year decrease in operating profits for the last quarter due to an oversupply of memory chips which caused prices to plummet, despite production cutbacks. However, the company was still able to exceed analysts’ earnings predictions.

For the quarter ending June 30, the company registered sales of $47.2 billion (60.01 trillion Korean won), marking a 22% decrease compared to the previous year. This aligns closely with consensus estimates of 60.6 trillion Korean won.

Samsung’s operating profit plummeted to a startling $527.2 million (670 billion Korean won). Despite this, the figure managed to surpass the average expectations of 640 billion Korean won.

The South Korean chip maker has been contending with a post-Covid slump in demand for memory chips. This is due to manufacturers who hoarded these chips during the pandemic catering to skyrocketing consumer electronics sales but now struggle with an excess of chip inventories. This led Samsung to declare a reduction in production in April.

Following the release of Samsung’s earnings, shares saw a 0.7% decline in Thursday morning trading.

Just last week, Taiwan Semiconductor Manufacturing Co (TSMC), the biggest rival to Samsung Electronics, reported a 23.3% annual decrease in net income, marking the first dip in profits in four years. The company also lowered its revenue projection for 2023, hinting that the worldwide electronics market could potentially face an extended slump, in spite of the accelerated growth in AI.

Leave a Comment