On Thursday, South Korean tech giant Samsung Electronics announced a significant decrease in revenue during the second quarter. This decline was attributed to disruptions in the global semiconductor sector and a decrease in demand for locally made semiconductors.
Samsung’s Financial Performance in Second Quarter
During the April-June quarter, Samsung’s consolidated operating profit decreased by 95.3% compared to the previous year, amounting to 668.5 billion won (approximately 525.6 million U.S. dollars). The revenue also went down by 22.3% to 60 trillion won (about 47.2 billion dollars), and the net income experienced a significant drop of 84.5% to 1.72 trillion won (around 1.4 billion dollars).
Specifically, Samsung’s chip-making business faced challenges, reporting an operating loss of 4.36 trillion won (roughly 3.4 billion dollars) on consolidated revenue of 14.73 trillion won (approximately 11.6 billion dollars) in the second quarter. This was better than the first quarter’s operating loss of 4.58 trillion won (about 3.6 billion dollars) because there were fewer price drops for DRAM and NAND chips.
The display panel unit performed well, achieving an operating profit of 840 billion won (around 660.4 million dollars) on revenue of 6.48 trillion won (approximately 5.1 billion dollars) in the April-June quarter.
The mobile phone and networks business also showed a positive outcome with an operating profit of 3.04 trillion won (about 2.4 billion dollars) on revenue of 25.55 trillion won (approximately 20.1 billion dollars).
In the second quarter, Samsung observed a decrease in TV demand compared to the previous quarter, which they attributed to typical seasonal spending patterns. However, they anticipate a strong performance in the premium TV market during the second half of the year.
Samsung also acknowledged that the overall market demand was affected by higher interest rates and inflation during the second quarter. Despite this, they expect the smartphone market to return to year-on-year growth in the second half, particularly in the premium segment.
Company forecast for the semiconductor market
Samsung Electronics forecasts that the semiconductor industry will continue to face challenges in the coming months despite a narrowing of losses in the second quarter. While the global memory chip market is showing signs of recovery, the demand rebound is primarily concentrated in high-end chips used for artificial intelligence (AI).
Samsung plans to extend production cuts in response to the constrained demand, particularly for NAND flash chips. The company expects the memory chip business to remain in the red in the current quarter, with the operating loss projected to decrease from the previous quarter but still persist. Broader chip demand recovery is expected to occur in the next year.
Samsung, the largest memory chip maker in the world, stated that the semiconductor industry will likely see ongoing production cuts in the second half of the year. However, they expect demand to slowly improve as customers reduce their chip inventory levels.
