Samsung Electronics, the world’s leading memory chip and smartphone manufacturer, has revealed disappointing financial results for the April-June quarter of 2023. The company reported a significant 22 percent drop in revenue, amounting to 60 trillion won, while its profit took a massive hit, plunging by 95 percent.
In the second quarter, Samsung’s capital expenditures (Capex) reached KRW 14.5 trillion, with KRW 13.5 trillion allocated to semiconductors and KRW 0.6 trillion for displays. The semiconductor investments were directed toward completing the P3 infrastructure and the P4 framework, focusing on mid- to long-term supply. Additionally, foundry investments were centered on fabs in Taylor, Texas, and Pyeongtaek, Korea, aiming to meet the demand for advanced nodes. In the display segment, Samsung focused its investments on infrastructure and module production enhancements.
Samsung’s Mobile eXperience (MX) and Networks businesses posted KRW 25.55 trillion in consolidated revenue and KRW 3.04 trillion in operating profit for the second quarter. Samsung does not reveal the revenue of its Networks Business. Samsung said the Networks Business’s revenue declined in major overseas markets including North America and Japan. Samsung’s Networks Business aims to win new projects to grow revenue and reinforce technology leadership in 5G core chips and software-based virtualized Radio Access Networks (vRAN).
Samsung acknowledged that the memory chip market is gradually moving toward stability due to increasing production cuts in the industry. The company anticipated that chip clients would shift from utilizing existing inventory to purchasing semiconductors once again. Rival company SK Hynix also indicated signs of a nascent market recovery, driven by robust demand for artificial intelligence applications.
The chip division at Samsung reported a substantial loss of 4.36 trillion won in the June quarter, marking a significant divergence from its typical position as Samsung’s primary cash cow. This loss followed a 9.98 trillion won profit reported for the same period a year earlier. Although chip losses slightly decreased compared to the first quarter due to strong demand for memory chips used in AI applications, uncertainties in short-term demand impacted the company’s chip contract manufacturing business, resulting in a significant profit decline for the quarter.
Despite the challenging performance in the chip division, Samsung’s mobile business showed promise, reporting a profit of 3.04 trillion won in the June quarter, up from 2.62 trillion won in the previous year. The company expressed optimism about the overall smartphone market, expecting it to return to year-on-year growth in the second half of the year, particularly in the premium segment.
Breakdown of Samsung’s financial performance for Q2 2023:
The DS (Device Solutions) Division reported revenue of KRW 14.73 trillion and operating losses of KRW 4.36 trillion.
SDC (Samsung Display Company) posted revenue of KRW 6.48 trillion and operating profit of KRW 0.84 trillion.
The Mobile eXperience (MX) and Networks businesses recorded revenue of KRW 25.55 trillion and operating profit of KRW 3.04 trillion.
The Visual Display and Digital Appliances businesses achieved revenue of KRW 14.39 trillion and operating profit of KRW 0.74 trillion.
The second quarter’s performance marked one of Samsung’s lowest profits in 14 years, reflecting the ongoing challenges in the chip industry and its impact on the company’s overall financial performance. As the industry dynamics continue to evolve, Samsung aims to navigate through uncertainties and capitalize on growth opportunities, particularly in the smartphone market.