Samsung announced its earnings guidance for 2023Q1: Profit fell 95.8% year-on-year

Over the past few months, the global economy has been beset by decelerating growth, declining market demand, an excess of semiconductor production capacity, and inflated inventory levels. Consequently, numerous semiconductor companies have issued quarterly financial warnings, signifying substantial revenue shortfalls and considerable challenges in the preceding quarter.

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Samsung initially released its 2022 fourth-quarter earnings guidance in January. Merely a quarter later, the company’s quarterly financial report has again sounded the alarm, announcing the first quarter earnings guidance for 2023. The report reveals a consolidated sales figure of approximately KRW 63 trillion, a year-on-year decrease of 19%, and a consolidated operating profit of about KRW 600 billion, plummeting by 95.8%. For the first time in 14 years (since the first quarter of 2009), the consolidated operating profit has dipped below KRW 1 trillion. This performance is evidently below external expectations, indicating that Samsung is struggling to cope.

Amid the ongoing downturn in the storage market, Samsung’s progress has been hindered, with the deterioration of the memory division’s performance being the primary cause of the reduced revenue in the first quarter of 2023. Additionally, the foundry division may potentially transition from profit to loss. Samsung has finally abandoned its previous stance of maintaining production levels in recent months, stating that “storage chip production will be adjusted to a meaningful level, as there is sufficient inventory to meet future demand.” Although Samsung is willing to adjust storage chip production capacity in the short term, long-term infrastructure investment projects will continue, and the proportion of research and development investment will be expanded without relinquishing expansion strategies.

However, there is some positive news for Samsung. The recently launched Galaxy S23 series of smartphones has seen a shipment volume exceeding 11 million units, demonstrating a promising performance. Samsung will release its first-quarter financial report for 2023 at the end of April, providing more specific information and insights.