Summary: Samsung reported a Q4 2022 operating profit of $3.4 billion, a 69% YoY decline, its worst since September 2014. This was likely due to a drop in global shipments and a 97% decline in the profit of its chip segment, as demand for chips dropped. However, Samsung remains optimistic and expects demand to recover in the second half of 2023. Analysts advise investors to cash in on declining chip stocks and predict a potential increase in demand for chips soon.
Samsung reported an operating profit of $3.4 billion for Q4 2022 which represents a decline of 69% year-on-year. Other reports show that the South Korean chip giant is not alone as other Asian chipmakers also saw losses.
CNBC reported that this was its worst profit that Samsung had seen in a quarter since September 2014. While the drop could be attributed to the global shipments fall in the same period, this is not the only business that the company is involved in. The phone maker is also a chip maker and that arm of its business suffered greatly due to drop in demand.
According to Bloomberg, its chip segment saw its profit drop by 97% in the quarter under discussion.
Following the news, Samsung Electronics shares fell by 3.6% in Seoul trading session and its rivals like TSMC, Tokyo Electron, Renesas Electronics, Advantest, and Lasertec also saw their shares fall on the same day.
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SK Kim, an expert analyst working with Capital Markets said that Samsung and other key players in the chip industry would have to cut their spending on production. There are also murmurs of possible layoffs coming to the industry, something we have seen among many US companies in the past seven months.
The South Korean company is not giving up and expects that things would turn around soon.
“For 2023, while the macroeconomic uncertainties are expected to persist, the Company anticipates demand to begin recovering in the second half. The semiconductor business will continue to reinforce market and technology leadership and expand the proportion of advanced nodes and products,” Samsung told the public.
Experts working with reputable finance companies like JP Morgan Private Bank and Yuanta Securities are advising investors to cash in on the declining chip stocks. One analyst, Daniel Yoo of Yuanta Securities, predicts that there could be increase in demand for chips soon from data centers and the growing AI market. JP Morgan Private Bank analysts, Jacob Manoukian and Jonathan Linden, also agree because of the role semiconductors play in every electronic gadget these days.
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