Like other electronics companies, market leader Samsung is feeling headwind. This is reflected in the Koreans in a falling demand for memory chips that are used in smartphones and other devices. Nevertheless, the optimism is unbroken.
Electronics giant Samsung earned significantly less in the third quarter of 2022 amid declining demand for memory chips and falling prices. The surplus fell by 23.6 percent year-on-year to 9.39 trillion won (about 6.6 billion euros), the South Korean company said. In particular, the weakness of the PC market and the likewise falling demand for mobile devices and televisions had an impact on the chip business.
Samsung Electronics is the market leader in smartphones, memory chips and televisions. In addition to its own devices, the group also produces displays for Apple iPhones on a large scale. According to the information, sales increased by 3.8 percent to 76.78 trillion won (53.8 billion euros) in the third quarter. The company expects full-year sales to top the previous 2021 peak.
In view of an impending recession, the semiconductor industry had already expected weaker memory demand in the second half of the year. The high inflation had dampened consumer sentiment, which also weighed on the chip producers. Earnings from the memory business declined as demand for consumer products remained weak and customer inventory adjustments exceeded market expectations, Samsung said in a statement.
The operating profit of the semiconductor division alone fell by almost 50 percent to 5.12 trillion won in the months of July to September. According to its own statements, however, Samsung recorded the highest sales in a quarter in contract manufacturing.
Asian chip companies such as Samsung or its local competitor SK Hynix are also feeling the headwind from the US government’s efforts to strengthen the domestic chip industry, for example through subsidies, and to block the expansion of production of sophisticated semiconductors in China.
According to Samsung, the geopolitical uncertainties will probably have an impact on memory demand until 2023. However, a recovery is expected in the second half of the year as new data centers and computers require more memory again. In the market for mobile devices including smartphones, Samsung noted a slight upturn compared to the second quarter, despite inflationary pressures.
Operating profit rose to 3.24 trillion won from 2.62 trillion won thanks to solid sales of its flagship models including foldable devices. Samsung expects the smartphone market to expand further in 2023. According to figures from the analysis company Canalys, the market for smartphones shrank by 9 percent in the third quarter.
