South Korean electronics giant Samsung’s first-quarter operating profit plummeted as memory chip prices continued to fall and demand remained weak.
Here are Samsung’s first quarter earnings:
Earnings: 63.75 trillion Korean won (about $47.6 billion).it is equivalent Samsung’s own guidance of about 63 trillion won However, Refinitiv’s consensus estimate is below the 63.9 trillion won analysts expected.
Operating income: 640 billion Korean won (about $478.55 million) decreased from 14.12 trillion won a year earlier.company Guidance issued earlier this month The first quarter profit is expected to be KRW 600 billion.
This is the company’s lowest operating profit since the first quarter of 2009.
After forecasting a sharp drop in profits earlier this month, Samsung said it would make “meaningful” cuts in memory chip production following the lead of smaller rivals such as SK Hynix and Micron.
“Samsung Electronics announced disappointing first quarter numbers, but also announced a significant production cut amid a deep recession for memory chips. The market has since responded positively to the news.” said SK Kim of Daiwa Securities Capital Markets. He told CNBC’s “Squawk Box Asia” on Thursday.
“And yesterday, SK Hynix announced disappointing numbers, but they led it to a recovery. So, despite the disappointing earnings numbers, we see positive investor sentiment on inventory,” Kim said.
Samsung is the world’s largest manufacturer of memory chips, used in everything from personal computers to smartphones to data center servers.
According to International Data Corporation data, PC shipments plunged 29% year over year in the first quarter, Memory chip prices have fallen over the past few months as a result of high inventories and lack of demand.
Smartphone and PC makers stockpiled chips during the pandemic as demand for consumer devices increased, but are now grappling with excess inventories as rising inflation discouraged consumers from buying these items. is.
Samsung said it expects limited demand to pick up Larger data centers are making more conservative investments and customers continue to adjust their inventory. The company expects demand to gradually recover in the second half of the year.
Samsung also expects new smartphone launches, PC promotions and increased adoption of new CPUs to boost demand for memory chips.
Daniel Yoo, head of global asset allocation at Yuanta Securities Korea, pointed to the strong performance of US big tech companies.
Meta’s first-quarter sales were boosted by the Chinese company’s advertising, while Microsoft reported third-quarter results that both beat and underperformed analyst expectations.
“So I think there will be talk of a recovery, and the good news is that despite these low profit figures, we are seeing sharp price stabilization,” Yu told CNBC on Thursday. Street Signs Asia”.