Samsung Electronics has had another poor quarter. DRAM chips are struggling to sell as demand for PCs remains small. Disappointing smartphone sales also contribute to a significant surplus of system memory still in stock.
Earlier this month, the company had indicated that it expected the lowest quarterly profit in 14 years. That has now become a reality. It was estimated that the disappointing chip market would not recover until 2024.
Revenue figures were slightly lower than already muted expectations had anticipated. 60.01 trillion won (42.19 billion euros) represents a 22 percent drop in sales and falls just short of the predicted 60.8 trillion won (42.75 billion euros).
No AI hype, curtailing production
Samsung also can’t ride the AI hype, when it could have done so for a long time. The latest Nvidia hardware currently uses GDDR6X video memory, which it buys from Samsung competitor Micron. The generation before this, the South Korean company was still the supplier for the memory modules.
The company has announced that, following its competitors’ lead, it will curtail production of memory chips, resulting in a price increase.
Smartphones disappoint, including the S23
Tech giant Microsoft similarly had disappointing hardware figures, but over at Redmond, like at Google, it could count on solid cloud profits to still achieve positive financial results. Samsung does not have that luxury, although after a good first quarter for the S23 line it would have been hoping for good news from the smartphone corner. Nothing could be further from the truth: the economic instability is evidently causing a lack of demand for a new phone after early adopters. Still, we were very positive about the S23 flagships in our review.
With the releases announced yesterday from the Z Flip, Z Fold, Galaxy Tab and Galaxy Watch lines, the phone maker will hope to drum up more demand. That remains to be seen since most of those products are premium products anyway.