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South Korean tech big blames weak demand for reminiscence chips for sharp decline in income.
Samsung Electronics is anticipating its worst fourth-quarter revenue in eight years amid a pointy decline in world demand for reminiscence chips and smartphones.
Income are estimated to have plunged by 69 p.c to 4.3 trillion gained ($3.4 billion) in the course of the October-December interval, the South Korean tech big mentioned on Friday.
Weak demand for reminiscence chips was “larger than anticipated as clients adjusted inventories… to additional tighten funds spurred by considerations over deteriorating shopper sentiment triggered [by] continued excessive world rates of interest and weak financial outlooks,” Samsung mentioned in an announcement.
The preliminary outcomes, which had been nicely wanting estimates, level to Samsung’s smallest quarterly revenue because the third quarter of 2014.
The dismal revenue estimate by the world’s largest reminiscence chip, smartphone and TV maker – a bellwether for world shopper demand – units a weak tone for different expertise corporations’ quarterly outcomes.
“All of Samsung’s companies had a tough time however chips and cell particularly,” mentioned Lee Min-hee, an analyst at BNK Securities.
Rising world rates of interest and value of dwelling have dampened demand for Samsung’s smartphones in addition to the semiconductors it provides to rivals similar to Apple.
“Reminiscence chip costs fell within the mid-20 p.c in the course of the quarter, and high-end telephones similar to foldable didn’t promote as nicely,” mentioned Lee, including that Samsung’s show enterprise was damage as a result of consumer Apple’s manufacturing delays on the world’s greatest iPhone manufacturing unit in China in the course of the quarter.
Three analysts mentioned they anticipated Samsung’s income to dive once more within the present quarter, with a possible working loss for the chips enterprise as a glut drives an extra drop in reminiscence chip costs.
Samsung had mentioned in October that it didn’t anticipate a lot change to its 2023 investments.
Samsung has a historical past of not asserting reminiscence chip manufacturing cuts, in keeping with analysts, however might organically regulate funding by delaying bringing in tools or by way of different methods.
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