Samsung Electronics has recently published its Q1 2023 earnings. According to the official stats, its operating profit for the first quarter (January-March) of this year was tentatively tallied at KRW 63 trillion, down 95.75% from the same period last year. During the same period, sales decreased by 19% to KRW 63 trillion.
Recording quarterly performance below 1 trillion won for the first time in 14 years, it changed its stance that there is no artificial production cut. It is the first time in 14 years that Samsung Electronics’ quarterly operating profit has fallen below 1 trillion won since the first quarter of 2009 (590 billion won) at the height of the global financial crisis. System semiconductors and SDC (display) also suffered sluggish performance due to the sluggish economy and the off-season.
The second quarter prediction is also appeared. According to the information, Samsung Electronics’ second-quarter operating profit compiled 853 billion won. This is a decrease of 93.95% compared to the same period last year. Sales are expected to decrease by 17.33% to KRW 63,821.4 billion.
TrendForce, a market research firm, predicted that the price drop of DRAM in the second quarter would reach 15-20%. In the first quarter, Samsung made up for some semiconductor losses due to strong sales of the Galaxy S23, but uncertainties are greater in the second quarter.
Kim Yang-paeng, an expert researcher at the Korea Institute for Industrial Economics and Trade, explained, “There are not many factors that can lead to a recovery in demand.” He went on to say, “The semiconductor consumption market needs to recover, but there is nothing that can be caught in hand. Neither artificial intelligence (AI) nor chat GPT is enough to change the market flow.”
Noh Geun-chang, head of the research center at Hyundai Motor Securities, also predicted, “Demand is unstable in the second half,” and “The third quarter is also formidable, and it will only recover in the fourth quarter.”
In response, Samsung Electronics said on the same day, “We are adjusting memory production to a meaningful level, focusing on products with secured supply.”
As Samsung Electronics participates in production cuts, expectations for a rebound in the semiconductor market are expected to grow. If Samsung Electronics, the No. 1 memory operator, cuts production, it will have a great impact on the market.
However, Samsung Electronics decided to expand infrastructure investment to secure essential clean rooms and R&D investment to strengthen technological leadership.