No business is immune to the global macroeconomic environment and despite being sufficiently diversified, Samsung isn't insulated from the challenges either. The company's recent quarterly results have reflected the challenges that it continues to face in the market.
There's consensus among experts that it's only going to get worse before it gets better. Samsung is going to see that reflected in its bottom line, too. The company's quarterly profit is now projected to hit its lowest point in six years.
Samsung has lost a lot of money due to the global economic downturn
Consumer spending on mobile devices and consumer electronics is down considerably due to high inflation worldwide. With interest rates on the rise, customers are putting off purchases they may have otherwise made through credit cards or buy now, pay later services. Businesses have also pulled back spending due to low demand. That has resulted in reduced orders for Samsung's memory chip products that account for the bulk of its profits.
Analysts feel that it won't be a pretty picture for the quarter ending December 2022. A survey of 21 analysts predicts that Samsung's operating profit will come in at $4.62 billion for the quarter. While it's an impressive figure, it would be Samsung's lowest quarterly profit since Q3 2016.
Analysts expect that shipments of Samsung smartphones and chips are likely going to fall short of market expectations. DRAM memory chip prices have also fallen by 40% year over year, wiping a significant chunk of Samsung's quarterly profits in the process. Competing memory chip producers like Micron and SK Hynix are also impacted by this and have decided to cut their planned investments in 2023.
Samsung is taking a different approach. The company is diving into its deep pockets to keep up its investment plans for 2023. This will put it in a great position to hit the ground running when the memory chip market recovers down the line. It doesn't hurt that Samsung has over $100 billion in cash as of September 2022.
The company is expected to announce its preliminary results for the past quarter tomorrow with the full earnings release coming later this month.
