Recently, Samsung Electronics revealed that it would be going to maintain capital spending this year also as of the previous year. This statement came after profit collapsed on a steep drop in chip demand.
Notably, the South Korean biggest company has been fighting with a historic slump in the price of memory. Since consumers cut down on purchases of gadgets due to the rise in interest rates and inflation. Due to this, the inventory starts to pile up, which forces double-digit price slides resulting in big losses.
Unpredictability in the global economy is considered in corporate and consumer sentiment. Therefore, the company warned that it predicted recovery in chips to start in the second half of the year. While smartphone demand would probably decrease in 2023. And instead of pressure on the world’s biggest memory chipmaker to slow down investing in new capabilities, the company disclosed that it would keep going at the same pace of spending.
“In memory, we will continue to invest in the mid- to long-term to prepare for future demand,” Jaejune Kim, executive vice president in charge of the company’s memory division said at an earnings call Tuesday.
As said by the company in a release, mentioning the semiconductor business. It expects factory usage rates to reduce and earnings to decline in the first quarter.
“The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown”
Samsung says it is possible to recover on mobile demand in the second half
Seamlessly, the largest chipmaker that seamlessly supplies displays and semiconductors used in Apple Inc.’s iPhones reveals it sees “possible recovery on mobile demand in the second half” as a customer seeking for more storage gadgets. In addition to the news, the Galaxy device maker also said that demand will probably decline in 2023.
Talking about profit then Samsungs primary key chip segment immersion 97% to 270 billion won in the three months. Since customers are continued to work through a pyramid of inventories. While operating profit reduce from 69% to 4.3 trillion won in a huge drop in over a decade.
Memory pricing will seamlessly continue to decline during the first half of 2023. The same was said by Goldman Sachs analyst Giuni Lee during a note to investors ahead of Tuesday’s announcement.
“We expect the company to be in red for both DRAM and NAND starting in the first quarter of 2023.”
Samsung’s earnings came into the limelight after fierce predictions from other corners of the tech sector. It is being said by bracing for one of its worst quarters in history. On the other hand, Microsoft Corp. said, it’s cutting its workforce by 10,000, even as its profit beat analyst estimates.
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