Samsung Electronics Co. reported a 69 percent decline in operating profit in the fourth quarter last year as the memory chip business remained sluggish on slowing global economy.

The South Korean electronics giant’s semiconductor division sent shock waves through the market as its fourth quarter operating profit fell short of analyst forecast and stood in the range of 200 billion won ($163 million).

“Although macroeconomic uncertainty is likely to persist this year, market conditions will remain weak for the short term and demand will recover in the second half,” Samsung Electronics said. “Our DS division will increase the share of advanced processes and products and prepare for the future by further strengthening market and technology leadership with infrastructure investment.”

Samsung Electronics announced in its regulatory filing Tuesday that its consolidated operating profit last year stood at 43.38 trillion won, a 15.99 percent fall from the year earlier.

Revenue was 302.2 trillion won, up 8.09 percent from the same period last year, exceeding the 300 trillion won for the first time. Net profit was 55.65 trillion won, an increase of 39.46 percent.

Operating profit in the fourth quarter last year fell sharply to 4.31 trillion won, down 68.95 percent year on year and 18.6 percent lower than the forecast of financial data tracker Yonhap Infomax. It is the first time in more than eight years that the company posted a 4 trillion won range in quarterly profits since the third quarter of 2014.

Sales and net profit in the fourth quarter were 70.46 trillion won and 23.84 trillion won, respectively, which is similar to the preliminary earnings of 4.3 trillion won in operating profit on 70 trillion won in sales as announced by the company earlier this month.

Samsung Electronics had reported the greatest performance ever due to the semiconductor boom in the first half of last year, but demand for finished products and chips took a dive as concerns increased over high interest rates and a prolonged economic recession while sales spike during the pandemic faded.

By division, the semiconductor or DS division posted a mere 270 billion won in operating profit on sales of 20.7 trillion won. Memory earnings plunged as memory prices fell sharply with its buyers continuing inventory adjustments.

System LSI’s earnings also fell on sluggish sales of major products due to inventory adjustments in the industry.



Foundries, however, had the highest quarterly and annual sales owing to the expansion of vendor sales. Profits increased year-on-year with the expansion of production capacity mainly for advanced processes and vendor diversification.

The device experience (DX) division recorded an operating profit of 1.64 trillion won on sales of 42.71 trillion won in the fourth quarter.

Consumer electronics, in the meantime, saw its profit decline due to sluggish market demand and rising cost burden.

Profits at the mobile experience (MX) division in charge of smartphones also declined due to a fall in smartphone sales.

Samsung Electronics’ facility investment last year was 53.1 trillion won, of which semiconductors spent 47.9 trillion won and display 2.5 trillion won.

Yet, this may not be the end of the company’s underperformance. Weak global demand for information technology and memory chips is expected to continue into the first quarter of this year.

Samsung Electronics announced that it plans to meet the demand for server- and PC-use double data rate 5 (DDR5) more proactively in time for the launch of new central processing units (CPUs) as well as the demand for mobile high-capacity products such as low power double data rate 5X (LPDDR5x).

The company plans to expand sales of its flagship devices such as the Galaxy S23 and reinforce sales of premium tablets and wearable products. For ailing consumer electronics, the company will focus on profitability by launching new products such as “Bespoke Infinite Line.”

By Pulse

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