Ryan MacLeod/Android Authority
TL; DR
- Samsung reported its earnings for the first quarter of 2023.
- The report reveals that Samsung experienced a 95% drop in profits.
- Samsung’s chip division is responsible for the majority of losses.
Times are tough for the smartphone market. Due to factors such as inflation, demand is weak at the moment. According to Samsung’s latest earnings report, this sluggish market has caused some damage to the company’s financials.
According to a report from CNBCSamsung saw a huge drop in its profits during the first quarter of 2023. In fact, the manufacturer saw a staggering 95% drop in its profits year-on-year.
During the same time in 2022, the tech giant made a profit of 14.12 trillion KRW ($10.7 billion). However, this year the company reported a profit of KRW 640 billion ($478.55 million). This is the lowest operating profit Samsung has recorded since the first quarter of 2009.
While Samsung is known for its Galaxy phones, this didn’t seem to play a role in making profits. The launch of the Galaxy S23 series really helped. Revenue from the mobile business reportedly grew 22% and operating profit was up 3% year-over-year.
The premium market has grown in both size and value even amid weak smartphone demand stemming from ongoing macro uncertainty. Sales grew and profitability recovered to double digits on the back of strong sales of new premium models, centered on the S23 Ultra, and efforts to enhance operational efficiencies.
The real culprit behind the drop in profits appears to be Samsung’s chip division. In addition to selling phones, Samsung makes televisions, computers, and appliances. But its main business is components such as chips and displays.
Samsung reported a loss of 4.58 trillion Korean won ($3.4 billion) in this division. Last year, the company made a profit of 8.45 trillion Korean won ($6.3 billion). The loss was attributed to the pandemic, which forced the company to stockpile chips while demand surged. Now prices are down and Samsung is stuck with an excess of inventory.