Samsung’s earnings plummet amid global economic woes

Samsung Electronics said Tuesday its profit fell nearly 70% in the most recent quarter as the sluggish global economy weighed on demand for its consumer electronics products and computer memory chips.

The company’s operating profit of 4.3 trillion won (£2.8 billion) for the three months to December fell 69% year-on-year, marking the lowest quarterly profit since the third quarter of 2014.

Revenue fell 8% to 70.46 trillion won (£46.25 billion).

The South Korean tech giant thrived in the first two years of the pandemic thanks to its dual strength in parts and finished products, benefiting from robust demand for PCs, TVs and chips to power computer servers as Covid-19 forced millions to work at home.

But the company has had a harder time weathering the economic shock unleashed by Russia’s war in Ukraine, which has disrupted industrial supply chains and left major economies struggling with higher inflation and slower growth.

“The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” Samsung said in a statement.

The company’s profit from its bread-and-butter semiconductor business was 270 billion won (£177 million) in the most recent quarter, down sharply from 8.83 trillion won (£5.8 billion) a year earlier.

Samsung said chip prices have fallen sharply amid weakening demand as customers adjusted their inventories amid “rising uncertainties” in the global economy, an issue the company said is expected to extend into the first quarter of 2023.

Samsung also expects demand for its smartphones and TVs to fall further in the first quarter amid the global economic slowdown.

Samsung’s share price fell 3.5% on Tuesday.