Samsung Elec’s Q4 OP nearly 70% down on year due to weak chip demand

Samsung Electronics Co. building [Source : Samsung Electronics]

Samsung Electronics Co.’s operating profit in the fourth quarter last year plunged nearly 70 percent on year after the economic slowdown stemming from high inflation and interest rate hikes dampened overall demand for everything from semiconductors to appliances, IT devices and TVs.

In an earnings guidance released Friday, the South Korean tech giant estimated its consolidated operating income at 4.3 trillion won ($3.4 billion) for the fourth quarter ended December 2022, down 60.4 percent on quarter and 69 percent on year, coming sharply below market consensus of 6.9 trillion won compiled by local financial data tracker FnGuide.

It is the first time for Samsung Electronics’ quarterly operating profit to go below 5 trillion won since 4.06 trillion won in the third quarter of 2014.

Revenue also slipped 8.8 percent on quarter and 8.6 percent on year to 70 trillion won, which is also below the market consensus of 72.8 trillion won.

Samsung Electronics shares, however, traded 0.17 percent higher at 58,300 won on Friday morning.

The sluggish earnings were mainly after the global economy downturn bit into global demand for IT devices and home appliances and chips.

For full 2022, Samsung Electronics managed to raise a record revenue of 301.8 trillion won, up 7.93 percent from the previous year. It is the first time for the company’s annual revenue to surpass 300 trillion won thanks to record earnings in the first six months of the year when chip demand was still strong.

Operating income was down 16 percent on year to 43.37 trillion won, data showed.

The company will release final figures with division details on Jan. 31.