Photo: Samsung Electronics' manufacturing facilities in Pyeongtaek, Gyeonggi-do Province. Credit: Samsung Electronics.
Most expected the earnings report by Samsung Electronics 삼성전자 to be dire, but perhaps not quite to this degree. On April 7, South Korea’s largest corporation by market capitalization announced that its profit for Q1 2023 was KRW 470b (USD 355.6m) - a shocking 95% drop year-over-year. Samsung Electronics’ revenue over the same period was KRW 63t (USD 47.7b), a 19% decline year-over-year.
Samsung Electronics’ quarterly profit is the lowest since Q1 2009, in the midst of the global financial crisis caused by the Lehman Brothers bankruptcy. Although Samsung Electronics did not break down its profits and losses by division, analysts estimated that the company’s semiconductor division, responsible for between 60% and 70% of Samsung Electronics’ profit, lost over KRW 4t (USD 3b). The loss was only partially offset by the company’s mobile phone division, which is estimated to have generated over KRW 3t (USD 2.4b) in profit.
In response, Samsung Electronics announced that it will reduce chip production - the first such reduction since 1998 in the aftermath of the East Asian Financial Crisis. The share price of Samsung Electronics improved after the announcement, as investors hoped the production reduction would lead to easing the glut of semiconductor supply.
