Samsung Electronics, the world’s largest smartphone maker, announced on Friday that it anticipates its second-quarter profit to be the lowest since early 2009. The company is currently facing challenges due to weak consumer demand for technology products, resulting in an oversupply of memory chips.
This forecast indicates that Samsung continues to grapple with sluggish chip demand, which led its semiconductor division to record a significant loss in the first quarter of this year. The prices of dynamic random-access memory and flash memory chips reached a peak as consumers stockpiled devices during the Covid-19 pandemic. However, manufacturers, including Samsung, have been compelled to reduce output as demand declined.
Samsung stated that it expects an operating profit of 600 billion won (approximately $458 million) for the June quarter, compared to 14.1 trillion won during the same period last year. Furthermore, revenue for the April-June period is projected to decline by 22% to 60 trillion won.
Samsung Faces Challenges in Smartphone Business
The Korean company, Samsung, is expected to face challenges not only in its smartphone business but also in other sectors. It competes directly with Apple (AAPL) in the smartphone market. Although Samsung overtook Apple as the largest global smartphone maker by market share in the first quarter of this year, the overall smartphone market experienced a decline of 14% compared to the same period last year. This weakness is expected to have continued into the second quarter.
According to Richard Windsor of research company Radio Free Mobile, the weakness in consumer goods and electronics end markets is likely to have affected Samsung across its various sectors. Semiconductors, in particular, have been a major event for Samsung.
Despite these challenges, there is a ray of hope for Samsung. The company has previously suggested that chip demand will recover in the second half of this year. This belief is supported by executives at U.S. rival Micron Technology (MU), who stated last month that they believe the memory-chip industry has passed its trough and is on a path to recovery.
Samsung’s Q2 2023 Results Suggest Stability
It seems that Samsung’s upcoming Q2 2023 results will align with Micron’s recent comments, indicating a halt in the worsening of their situation. Analysts are eagerly waiting to see what Samsung has to say, as this will greatly influence market sentiments.
Despite this potential stability, Samsung’s stock experienced a 2.4% decline on Friday. Investors may have reacted to the broader market context or specific news relating to the company.
