Samsung Electronics' Q4 operating profit tumbles on lower chip demand
South Korea's tech behemoth Samsung Electronics saw its fourth-quarter operating profit tumble on the back of lower semiconductor demand, driven by growing concerns about the global economic downturn, the company said Tuesday.
Consolidated operating profit plunged 68.95 percent from a year earlier to 4.31 trillion won (US$3.5 billion) in the October-December quarter.
It missed market expectations of around US$4.3 billion, marking the lowest in about eight years since the third quarter of 2014.
The fourth-quarter revenue shrank 7.97 percent to US$57.2 billion, but net income expanded to US$19.4 billion.
Samsung said the business environment deteriorated significantly in the quarter on weak demand amid the global economic slowdown, noting that the chip-making earnings decreased sharply as prices fell and customers continued to adjust inventory.
Samsung's semiconductor business recorded an operating profit of US$219.3 million on revenue of US$16.3 billion in the fourth quarter.
The profit plummeted 96.9 percent compared to US$7.2 billion tallied a year earlier.
The South Korean company said it will focus on addressing the demand for high-end products for the chip business in the first quarter of this year.
The display panel business registered an operating profit of US$1.5 billion on revenue of US$7.6 billion in the October-December quarter.
Earnings in the mobile panel business retreated amid the weaker smartphone demand, but the large panel business narrowed losses thanks to the increased sale of QD-OLED for TVs.
The mobile phone and networks unit logged an operating profit of US$1.4 billion on revenue of US$21.8 billion in the fourth quarter.
Both the profit and the revenue declined compared to the previous quarter on soft demand for the mid-end and low-end smartphones, caused by continued inflation and geopolitical instability in Europe.
The TV and home appliances division posted an operating loss of US$48.7 million on revenue of US$12.5 billion.
The TV business recorded higher revenue and profit owing to robust demand for premium products, but the home appliances business saw its profit decrease because of an increased cost amid intensified competition.
For the whole year of 2022, Samsung's consolidated operating profit dwindled by 15.99 percent to US$35.2 billion.
Revenue gained 8.09 percent to reach a new high of US$245.4 billion, and net income grew 39.46 percent to US$45.2 billion last year.
Samsung expected macroeconomic uncertainties to continue in 2023, forecasting that demand may begin to recover in the second half.
Samsung's capital expenditure in 2022 came in at US$43.1 billion, including US$38.9 billion for semiconductors and US$2 billion for display panels.