Samsung Electronics is anticipated to report its lowest quarterly profit in over 14 years. The tech giant’s cash cow business has been hit hard by a chip glut, resulting in significant losses.
Analysts surveyed by Refinitiv project a staggering 96% year-on-year decline in Samsung’s June-quarter profit, amounting to 640 billion won (US$500 million). This would mark the company’s lowest profit for any quarter since Q1 2009.
The chip glut is caused by multiple factors. One factor is the decline in electronics demand after the COVID-19 pandemic. Another factor is the supply chain disruptions caused by the war in Ukraine. Additionally, consumer spending cutbacks due to rising inflation also contribute to the chip glut.
Samsung is not alone in its struggles; other major chipmakers like TSMC and Intel have also experienced decreased profits in recent quarters.
To mitigate its losses in the chip business, Samsung is implementing various strategies. These include cutting production, raising prices, and investing in promising technologies like 3-nanometer chips, which are expected to yield higher profitability.
However, the duration of the chip glut remains uncertain. Some analysts believe it could persist for several more quarters, posing a substantial impact on Samsung’s future profits.
