Electronics

According to Huacheng Import and Export Data Observation, Samsung Electronics disclosed preliminary verified data on the same day. According to the consolidated financial statements, the company's operating profit in the fourth quarter of last year was 4.31 trillion won (approximately 23.7 billion yuan), a year-on-year decrease of 68.95% to the lowest point in 8 years. In addition, Samsung Electronics achieved an operating profit of 43.3766 trillion won in 2022, a year-on-year decrease of 15.99%.

The profit of Samsung Electronics' semiconductor department plummeted by 97%, "according to Huacheng Import and Export Data Observation. As the prices of Samsung Electronics' core product storage semiconductors plummeted, the operating profit of Samsung Electronics' semiconductor industry in the fourth quarter of last year was only 270 billion Korean won, a sharp drop of 97% compared to the fourth quarter of 2021.

Analysts believe that the reasons for the decline in performance include a decline in storage semiconductor prices and a record high inventory of system semiconductors. There is speculation that Samsung may join other storage chip companies, including SK Hynix and Micron Technology, in reducing production to cope with falling prices and oversupply.

According to Huacheng Import and Export Data Observation, storage chip prices have significantly declined in the past year, and it is expected that they will continue to decline in the first half of 2023. This will undoubtedly add insult to injury for chip companies that have already laid off employees and reduced production.

Industry analysts predict that in addition to Samsung, storage chip manufacturer SK Hynix will also experience a loss of 812 billion Korean won in the fourth quarter. According to Huacheng Import and Export Data Observation, storage chips with high commercialization and sensitivity to market supply and demand changes are the wind vane of the semiconductor industry. Currently, chip companies are carrying a large amount of inventory, and market demand continues to be weak. Several chip companies, including Intel, Micron Technology, and Western Data, have announced after releasing revenue loss reports that they will cut production capacity, reduce job positions, and expenses to address the increasingly severe problem of oversupply and high costs.

Due to strong market demand for technology products, storage chip prices surged to a high point in early 2020 and began to decline at the end of 2021. In the second half of 2022, the quarter on quarter decline in chip prices further expanded due to factors such as global economic downturn and geopolitical conflicts. Analysts believe that the decline in chip prices may narrow or stabilize in the second half of 2023, but due to continued sluggish demand, storage chip prices are expected to remain low throughout 2023.

David Su, Senior Credit Analyst at S&P Global Ratings, said that thanks to the optimization of China's epidemic prevention and control measures, global technology demand will further recover in late 2023, which may increase consumer spending on products such as smartphones, "Huacheng Import and Export Data Watch reported.