Samsung Electronics operating profit drops 69 pct in Q4

South Korea's tech company Samsung Electronics logged a double-digit drop in its fourth-quarter operating profit due to weaker semiconductor demand caused by the global economic downturn, the company said Friday.

Preliminary operating profit stood at 4.3 trillion won (US$3.4 billion) in the October-December quarter, down 69.0 percent from a year earlier.

It missed market expectations of around US$4.9 billion.

Preliminary revenue fell 8.6 percent over the year to US$55.5 billion in the fourth quarter.

Net income and detailed earnings on each business unit will be announced later this month after an external audit and the board of directors' approval.

The double-digit reduction in operating profit was attributed to lower demand for chips and other tech products.

Concerns mounted about a global economic slump as central banks in major economies rapidly raised interest rates.

The US Federal Reserve lifted its benchmark interest rate by 0.50 percentage points to a range of 4.25-4.50 percent in December, while South Korea's central bank hiked its policy rate by 25 basis points to 3.25 percent in November.

The operating profit of Samsung's chip-making business was estimated at US$475.4 million in the fourth quarter, almost halving compared to the previous quarter.

Doh Hyun-woo, an analyst at NH Investment & Securities, said the poor performance in the chip business deepened on the back of the overall weakness in IT products demand and lower investment in data centres.

Doh forecast that Samsung's chip business would record an operating loss in the first quarter of 2023 due to sharp price falls for memory chips.

Operating profits for the display panel and the mobile phone units were estimated to have slid in double digits in the fourth quarter compared to the prior quarter amid the lower global demand.

Profit from the consumer electronics business was estimated to have increased in double figures to US$317 million in the fourth quarter on a quarterly basis owing to the year-end demand.

For the whole year of 2022, Samsung's preliminary operating profit retreated 16.0 percent to US$34.4 billion compared to the previous year.

Last year's preliminary revenue advanced 7.9 percent to US$239.1 billion.

It marked the highest revenue in Samsung's history thanks to solid demand and high prices for semiconductors in the first half of 2022.