Samsung’s profit falls significantly, the tech sector is on the decline
October 7, 2022

Samsung’s profit falls significantly, the tech sector is on the decline


Samsung’s quarterly profit drops by 32 percent, which means the first loss in the last 3 years. AMD also painted a gloomy picture.

Refinitiv SmartEstimate, based on the work of 22 analysts, expected that Samsung’s third quarter profit would show a 25 percent decrease, and this would mean the first minus in the last three years (on an annual basis).

In the end, Samsung came up with even worse numbers than expected, so according to the official forecast, the decline is 32 percent.

According to the analysts, here, too, the substantial drop in demand for electronic devices and chips, rising inflation, central bank measures, recession fears and geopolitical uncertainties can be listed as reasons: both consumers and companies are holding back on spending. Even the PC, mobile manufacturers are not buying anymore, instead they are using the accumulated inventory, further reducing sales and causing an industry slope. The decline in the memory chip market is said to be particularly large and sharp.

Analysts recently expected Samsung’s operating profit to drop to $8.3 billion in the period between July and September, but according to Samsung, it will only be $7.67 billion.

Analysts say that when a company is the world’s largest producer of chips, mobile phones, TVs and OLED displays, it is very sensitive to the economic environment and its profits to demand. Further reductions are expected for the fourth quarter.

Of course, this also indicates that the explosive march seen during the pandemic and remote work is over, replaced by falling demand. The announcement of worse-than-expected preliminary results leads to further downgrades and gloomy forecasts, according to analysts. They expect an upswing next year at the earliest.

These opinions are supported by the fact that recently Micron, SK Hynix and Kioxia have also significantly curbed production and investment, issued similar announcements (it is true, Micron then announced that it will spend 100 billion dollars on a new chip factory in New York). AMD also indicated yesterday that PC demand is weaker than expected, so compared to the previous, already gloomy forecast, its sales revenue will be another $1 billion less for the third quarter.

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