Samsung Electronics reports its worst quarterly earnings in 14 years, factoring in a slowdown in consumer electronics spending and a global spate of microchips hitting its core memory business. The South Korean giant, world leader in memory chips and smartphones, announced operating profit that fell to 640 billion won (-95.5% annually), equivalent to about $480 million. Net profit was 1,570 billion (-86.1%) and sales were 63,750 billion (-18.1%). The group said in a statement that overall consumer spending paid for the uncertain global macroeconomic environment.

A loss of 4,600 billion

The major semiconductor company reported an operating loss of 4.6 trillion ($3.4 billion) on profit of 8.5 trillion in the first quarter of 2022. Slowing demand coupled with weak global economic growth and consumer confidence has weighed on other key ones players in the sector, including South Korea’s SK Hynix and America’s Micron. Underscoring the troubles, revenue in the semiconductor industry fell 49% year over year to $13.7 trillion. Samsung admitted it expects the current difficult market conditions to continue and is focused on increased technological competitiveness and demand for high-end products.

Reduction of chip production

Memory chips, both DRAM and NAND flash, are used in a wide variety of products and devices, from personal computers and smartphones to database servers. But the industry’s heavy reliance on consumer products causes large management and performance fluctuations. Despite the troubles in the semiconductor sector, Samsung managed to remain profitable thanks to sales of smartphones, displays and gadgets. Samsung’s division, which includes smartphones, reported $3.9 trillion in operating profit. Analysts noted that while Samsung is reducing production of low-end DRAM and NAND chips, it is likely to ramp up more advanced memory semiconductors to meet demand in the high-end market. Samsung shares, whose quarterly data were broadly in line with market expectations, lost around 0.3% on the Seoul Stock Exchange.