Samsung profits tank 95 per cent as chip demand dwindles
Samsung experienced a 95 per cent plunge in profit during their second quarter, causing shares to drop over three per cent on Thursday.
The Korean electronics company reported an operating profit of 670bn Korean won (£407m) for the three months ending 30 June, its lowest in 14 years, and significantly down from the 14.1t (£8.5bn) won it reported a year ago.
However it did slightly beat average estimates of 640bn Korean won.
Sales were down 22 per cent year on year to 60t Korean won (£36.4bn).
Samsung blamed an oversupply of semiconductors for lowered prices in their key business and said the delayed recovery of silicon demand was due to inflation.
“Production cuts across the industry are likely to continue in the second half, and demand is expected to gradually recover as clients continue to destock their [chip] inventory,” Samsung said in a statement.
Despite the global slowdown in chip orders, the world’s largest chip supplier is investing heavily in silicon.
“Downturns are only short in nature typically, while the long-term future opportunity and demand for silicon will continue to grow at a significant pace,” Samsung UK & Ireland vice president James Kitto told Morning Wire
He said the long-term potential for microchips will be “driven by AI and future technologies that require significant computing capabilities”.
In March, Samsung announced it is throwing 300t won (£1.8bn) into its chip business over the next 20 years.
According to the European Chips Report, semiconductor demand is expected to double between 2022 and 2030.