Samsung announces Q4 2022 earnings, profit hits eight-year low

Earlier this month, Samsung published its earnings guidance for Q4 2022. In line with those numbers, the company has published its final Q4 2022 and FY 2022 results. The company’s profit has been the lowest in eight years, and that is due to the continued global economic downturn, rising costs, and lower demand for smartphones and other consumer electronics.

Samsung Electronics’ revenue was KRW 70.46 trillion (around $57.21 billion) in the quarter ending December 31, 2022, which is an 8% drop compared to Q4 2021. The company’s operating profit was KRW 4.31 trillion (around $3.5 billion), which is a 69% drop compared to Q4 2021. The company’s annual revenue for 2022 was KRW 302.23 trillion (around $245 billion), which was its highest, but its full-year profit was just KRW 43.38 trillion (around $35.22 billion).

Samsung’s semiconductor division barely broke even in Q4 2022 due to low memory chip prices and demand

Samsung 8th Gen V-NAND Storage Chip

Samsung’s chip division, Samsung DS, which usually contributes the most to the company’s income, had a disappointing quarter. During the COVID-19 pandemic, the company sold record-breaking semiconductor chips like DRAM and NAND storage. These chips are used in smartphones, tablets, laptops, PCs, gaming consoles, wearables, TVs, and even servers. However, due to high inflation, rising interest rates, the ongoing economic recession, and geopolitical tensions, the demand for these consumer electronic devices dropped sharply. Enterprises started cutting costs, resulting in lower chip sales and low chip prices. Hence, Samsung DS’ Q4 2022 operating income was just KRW 270 billion (around $219 million), which is considered barely breaking even in the semiconductor business.

However, Samsung isn’t the only semiconductor chip firm with a forgettable quarter. Its rivals Micron ($195 million loss) and SK Hynix reported losses for Q4 2022.

Demand for smartphones and other consumer electronics dipped due to the global economic downturn and other factors

Samsung DX, which is Samsung’s consumer electronics business, also had a poor run in the last quarter of 2022. The demand for even low-end and mid-range phones dipped, and Samsung faced a lot of heat from Apple in the high-end smartphone segment. The consumer electronics division contributed just KRW 1.64 trillion (around $1.33 billion) to the company’s profit.

Unlike Samsung’s other business divisions, Samsung Display performed solidly in Q4 2022. It contributed KRW 9.31 trillion (around $7.56 billion) in revenue and KRW 1.82 trillion (around $1.47 billion) in the company’s profit. That’s primarily due to the launch of Apple’s iPhone 14 series in Q4 2022. A majority of those devices use OLED panels made by Samsung Display.

The South Korean tech giant warned that these business conditions would persist, but it hopes the situation will improve in the second half of 2023. The company expects the demand for high-end smartphones like the Galaxy S and Galaxy Z series to continue, while the demand for low-end and mid-range devices will continue to be low.

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