Quarterly profits for Samsung are forecast to return to pre-Galaxy S levels

Quarterly profits for Samsung are forecast to return to pre-Galaxy S levels.

The persistent pressures in global trade and the widespread concern over a global economic slump were said to have forced Samsung to make harsh judgments about future gadget launches last year. Manufacturer’s operating profits dropped by 16% in 2022 compared to 2021, despite the company’s cautious strategy. The South Korean electronics giant has warned investors and the market to expect dismal results for the first quarter of 2023.

In its preliminary guidance, Samsung Electronics stated that it anticipates operating earnings of 600 billion won in Q1 2023, down from 14.12 trillion won in Q1 2022. The business attributes the bulk of the blame for this unprecedented drop to its semiconductor division, which accounts for little more than half of annual revenues on average.

According to Bloomberg, in order to concentrate on clearing out existing stock, Samsung will reduce the manufacture of new chipsets to a “meaningful level.” The publication goes on to say that the company was hesitant to make this call at first, especially because it wanted to steal market share from Micron and SK Hynix.

But it appears to be unable to generate sufficient revenue to sustain itself in the market. To be fair, Samsung’s competitors in the semiconductor industry are feeling the pinch of the economy just as much as Samsung is.

The full extent of Samsung’s losses, which may have been mitigated by its smartphone division, will be set out in further detail on the company’s quarterly earnings call later this month.

If the numbers don’t lie, Samsung Electronics just had its worst quarter since 2009, according to Ars Technica. Around this period, the company began producing Android phones, beginning with the Galaxy I7500 in 2009 and continuing with the original Galaxy S flagship the following year.

Electronics Weekly cites analysts who expect a slow first quarter for the industry’s leading chip manufacturers. Meanwhile, Semiconductor Intelligence’s market experts anticipate a 12% fall in the sector throughout 2023.

This forecast assumes the industry will start its gradual recovery in the second quarter of 2023 and build on it throughout the second half of the year.

Even if the chip business is going through a rough patch at the moment, manufacturers will be anxiously looking forward to the recovery process expected later this year, as SI is betting on a 5–10% expansion in the semiconductor sector next year.