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Samsung profits fall by 70% due to weak smartphone & chip sales

Sean — Fri, 06 Jan 2023 11:20:14 +0000

Samsung profits have tanked in the fourth quarter of last year by a noticeable figure following declining demand of its and slowing sales of its memory chips. There are various reasons for this issue, so here are all the details.

The South Korean tech giant recently share his financial report that showcased that the company saw a sizeable fall of near 70 percent in Q4 2022. This is a major fall in profits compared to the same period last year. There are many reasons for the fall in profits, with low demand for semiconductors and smartphones due to global economic issues. The brand reported that it had expected an operating profit of 4.3 trillion won and a revenue of around 70 trillion won for the fourth quarter of 2022.

However, it saw a revenue drop of approximately 9 percent year on year while its operating profits fell by 69 percent during this same time. Furthermore, the operating profits had also dropped by more than half from the third quarter, which is also when Samsung saw its first year on year profit decline in three years. This was also due to falling chip demand that led to weakening sales in the market.

Samsung added that it saw a significant drop in earnings from the memory business due to lackluster demand while also seeing weaker smartphone sales. It stated that this trend continues amid the uncertainties with the surrounding external factors that have caused a “potential global economic downturn.” The fall in sale also led to a decline in the average sales prices of the chips to lower than expected levels.

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ASML CEO says that attempting to restrict chip shipments to China will fail

Sean — Thu, 15 Apr 2021 11:27:40 +0000

ASML CEO believes that the attempt to control the export of chips to China will not work. The executive said that this would not only fail to hinder the region’s technological progress but also end up hurting the US economy as well.

According to a Bloomberg report, Peter Wennink, the CEO of ASML Holding believes that trying to control chip export to the region will be detrimental to the US. This move arrives amid growing trade tensions between the US and China, which had also led to restrictions on the sale of the Dutch company’s advanced equipment to Chinese firms. The senior official said that “I believe that export controls are not the right way to manage your economic risks if you have determined that there is an economic risk,” during an online event.

The executive further argued that “you close China from access to technology, that will also cost non-Chinese economies a lot of jobs and a lot of income.” Wennink believes that while it may take China a while to build its own semiconductor equipment and technology due to lack of access to foreign technology, non China based firms will be barred from one of the world’s largest chip markets.

In other words, this would harm even US based companies that trade with China. The CEO also stated that ending ties with China completely could probably cost anywhere between 80 billion to 100 billion US Dollars in sales. Furthermore, it could also affect 125,000 jobs in the US as well, as per estimates from the US Commerce Department.

US’ SIA chief predicts a rise in chip sales this year despite chip shortage

Jed John Ikoba — Mon, 01 Mar 2021 19:45:03 +0000

The seemingly unrelenting global shortage in semiconductors, critical for many manufacturing processes has led to massive discontinuities in the supply chain and has affected many carmakers, leading to the temporary closure of some plants and the accompanying job losses.

Industry analysts had predicted that the shortages could extend up to the fourth quarter of the year, as the leading chipmakers continue to expand their production capabilities to bridge the gap. However, because of rising demands, the sales outlook globally for chips in 2021 remains quite strong, according to a piece on EE Times by John Neuffer, president and CEO of the US’ Semiconductor Industry Association (SIA).

“Looking ahead to the long-term, rising demand for personal technology and chip-powered devices will cause the semiconductor market to continue to grow in the years ahead. In addition to personal devices and servers, the long-term applications of semiconductors __ including AI, 5G, autonomous cars, and clean energy __ are quickly gaining steam,” the CEO said. In 2021, sales are expected to rise by 8.4% from a year ago, Neuffer wrote.

A number of governments had made moves to intervene in the chip shortage situation but it is yet to be seen whether such interventions could restore some balance in the semiconductor industry in the short term. Long term, many chipmakers are making investments in new plants to boost capacity.

It is expected that governments should also make investments in this critical component of the tech infrastructure. Last week, US President Joe Biden signed into law, an executive order for a 100-day review of product supply chains, geared towards addressing the chip shortage that has affected the US economy in no small way. This is in addition to a proposed $37 billion budget for the CHIPS for America Act, which is aimed at promoting and incentivizing semiconductor production and research in the US.

The global shortage of chips has been hugely driven by the increasing appetite for personal tech devices, which was further accentuated by the coronavirus pandemic which forced millions across the world to transform their homes to workspaces, with the purchases of personal devices to ensure a seamless work from home. Furthermore, the demand for high-end technology driven by powerful chips needed for 5G and other smart processes is expected to even grow further in 2021.

(source)

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