Samsung has uncovered a sharp drop in earnings for 2022, mostly due to weak demand for its chips and smartphones, which are the company’s main sources of revenue. The Korean tech giant reported annual sales of KRW 302.23 trillion (US$245.4 billion) in its latest earnings report, marking a new record high for the company. But it also reported operating profit of KRW 43.38 trillion (US$35 billion) for all of 2022, down KRW 8.5 trillion (US$6.9 billion) year-on-year.
“The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown,” the company said. While the tech giant’s foundry business posted an increase in profits due to customer and application diversification, the overall semiconductor business performed poorly. Demand for its chips has been weak overall as customers adjust and reduce inventories amid economic uncertainties. Chip prices also fell, most likely due to a glut of unsold inventory, which contributed to the decline in the company’s earnings for the year.
In the fourth quarter of 2022, Samsung’s semiconductor business generated KRW 20.07 trillion (US$16.3 billion) in consolidated revenue but only KRW 0.27 trillion (US$219 million) in operating profit. For comparison, the company reported consolidated sales of KRW 26.01 trillion (US$21.6 billion at early 2022 exchange rates) and operating profit of KRW 8.84 trillion (US$7.35 billion) for the fourth quarter of 2021 -Dollar). Samsung is preparing for this year-round downtrend to continue over the next few months, but expects demand for its semiconductors to pick up in the second half of the year.