• Samsung has reported a 96 percent fall in operating profits and expects its worst results in 14 years for Q2 2023.
• Profits were down year on year from $10.8 billion to just $460 million.
• The tech industry has faced headwinds from a poor economic situation globally, and a slump in computer chip production.

One of the world’s largest device manufacturers, Samsung has reported that its profits for the second quarter of 2023 have fallen by 96 percent, a historic freefall not seen since the global financial crisis of 2008.

According to a very brief earnings guidance for the quarter, operating profits were eviscerated compared to the same period a year prior. From $10.8 billion in Q2 2022 down to $460 million in Q2 2023. This means that Samsung made around 22 times less money this year than the year prior for the quarter.

Reuters indicates that the last time Samsung saw profits this low was 14 years ago, since the fourth quarter of 2008 when the world was experiencing an economic recession. Though that year Samsung reported a loss of $568 million for the quarter, so at least that didn’t come to pass.

Samsung is still making money, even if its sales have slowed drastically. A decline of around 22 percent to $46 billion saw its stocks slide by a small margin in Seoul, reports Bloomberg.

The technology industry is bearing the brunt of a huge $160 billion global memory chip production shortage on the back of a sustained drought in demand. The semiconductor industry is expected to have experienced its most turbulent market conditions at the beginning of 2023.

As the global economy faces inflation and higher interest rates fueled by economic conditions during the height of the COVID-19 pandemic, and now the Russian invasion of Ukraine, consumers have retreated their spending power for luxury goods, like expensive gadgets and PCs.

PC maker Intel also saw its worst-ever loss this year in April as revenues fell 36 percent year on year. It saw its PC desktop sales drop by more than half, a slump experienced by basically every other business segment the company operates.

However, analysts are optimistic that these poor results in the tech industry are only temporary. Abating wider fears of an impending recession. It all depends on how the markets fare.

“If the economy is trending upwards by then, we expect significant market upside as consumers look to refresh, schools seek to replace worn down Chromebooks, and businesses move to Windows 11,” said Linn Huang, research VP for Devices and Displays at IDC.

Experts are also expecting Samsung to turn its ship around in due course. “We expect a sharp profit recovery in the second half as memory price declines are decelerating and demand is expected to recover,” said Sanjeev Rana, CLSA analyst. This as the computer chip glut begins to ease.

[Image – Photo by Babak Habibi on Unsplash]