By Olivia Nnorom
Samsung Electronics, the world’s biggest mobile phone and memory chips manufacturer, said its first-quarter operating profit plunged by more than 95 per cent,its worst quarterly results in 14 years due to a record $3.4 billion loss in its key semiconductor unit as demand for consumer devices remained softened.
Samsung in a statement said the loss was the result of “ongoing inventory adjustments leading to a decrease in overall demand amid an economic slowdown and weakened customer spending.
“Demand for dynamic random-access memory chips, which are widely used in consumer electronics and other industries, was sluggish due to inventory adjustments and with consumer demand for mobile and PC applications having not yet recovered,” the company stated.
The company further noted that Covid-19 pandemic caused an unprecedented surge in demand for consumer electronics, catching the industry by surprise and upending supply chains, which led to shortages.
However, the company expects a gradual recovery in the second half of 2023, noting that customer inventory levels will have declined due to inventory adjustments occurring since the second half of last year.
According to Samsung, despite a slowdown in the overall smartphone market, the company’s mobile unit grew its profit more than three per cent to 3.94 trillion won, from 3.82 trillion won a year earlier, a gain driven by strong sales of the Galaxy S23 series launched in February, particularly by the high-end Ultra model.
The mobile giant also sees global supply chains as being 100 percent stable following a period of disruption when company operations were hampered.
