Samsung reports 96% drop in revenue in Q1 2023

By Al Mayadeen English
Source: Agencies
7 Apr 2023 13:41

Samsung reports a drop in revenue and a "significant reduction" in memory chip output.

Employees walk past logos of the Samsung Electronics Co. at its office in Seoul, South Korea, on July 31, 2018. (AP)

After forecasting a 96% decline in quarterly operating profit, Samsung Electronics will reduce memory chip output. The world's largest chipmaker reported a steep reduction in sales due to a slowing global economy and lower demand following the pandemic.

Another reduction is expected in the fourth quarter. Operating profit is expected to be 0.6 trillion Korean won in the first quarter, which is 28.2 times lower than the 14.12 trillion Korean won in the first quarter of 2022 and 7.2 times lower than the 4.31 trillion Korean won in the previous quarter.

According to sources quoting a subsequent company announcement, Samsung has also announced a "significant reduction" in memory chip output.

Samsung Electronics is a multinational electronics company headquartered in Seoul that manufactures semiconductors, communications devices, memory chips, LCD displays, mobile phones, and monitors.

A report published by the Financial Times on March 3 revealed that South Korean tech firms who enrolled in the CHIPS and Science Act funding designed to boost US science and technology innovation are alarmed by a clause that was unveiled by Washington's commerce department.

Applicants who receive more than $150 million in direct funding from the $39 billion fund are required to share part of their profits with the US government.

The matter is of serious concern for companies such as SK Hynix and Samsung, which are required to cease manufacturing operations in China for the next ten years as part of the application's requirements.

Former trade minister Yeo Han-koo said that the clause about profit-sharing was "problematic" and that it was an "unprecedented move charting a new territory that we haven’t seen in recent years."

"Many companies may cry out on this. It may set a worrisome precedent for other countries who may follow suit," he was quoted saying by the news agency.

Samsung is reportedly building a $17bn foundry in Texas, while SK Hynix is planning to build a chip packaging plant in the US.

"We’re perplexed by these unexpected conditions. We’ve never seen anything like this for state incentives," said an industry executive. "It is unclear how they will calculate excess profits. They want to take some of our profits when the business is booming but they won’t return our money when the industry is in a downturn. This will be a key point of contention."