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Samsung's Q1 2023 earnings report wasn't just bad, it was really bad
- Samsung has reported its earnings in the first quarter of 2023.
- The report reveals that Samsung saw a 95% profit decline.
- Samsung’s chip division is responsible for a majority of the loss.
Times are tough for the smartphone market. Due to factors like inflation, demand is weak at the moment. According to the latest earnings report from Samsung, this slow market has really inflicted some pain on the company’s financials.
According to a report from CNBC, Samsung experienced a massive drop in profit during the first quarter of 2023. The manufacturer, in fact, saw a jaw-dropping 95% decline in year-over-year earnings.
During the same time in 2022, the tech giant made 14.12 trillion Korean won in profit ($10.7 billion). However, this year, the company reported a profit of 640 billion Korean won ($478.55 million). This is the lowest operating profit Samsung has recorded since Q1 2009.
While Samsung is well known for it Galaxy phones, it appears this didn’t play a role in the earnings hit. The launch of the Galaxy S23 series actually helped. Revenue from the mobile business reportedly grew by 22% and operating profit went up by 3% year-over-year.
The premium market grew in terms of both volume and value even amid weak smartphone demand caused by lingering macro uncertainties. Sales grew and profitability recovered to reach double-digits on the back of strong sales of new premium models, centering on S23 Ultra, and efforts to enhance operational efficiencies.
The real culprit behind the profit drop appears to be Samsung’s chip division. In addition to selling phones, Samsung makes TVs, computers, and appliances. But its main business is components like chips and displays.
Samsung reported a loss of 4.58 trillion Korean won ($3.4 billion) in this department. Last year the company earned a 8.45 trillion Korean won profit ($6.3 billion). The loss is attributed to the pandemic which forced the company to stockpile chips during increased demand. Now prices have gone down and Samsung is stuck with a surplus of inventory.