SEOUL: South Korean tech giant Samsung Electronics on Thursday (Oct 27) said its third-quarter operating profits were down 31.39 per cent year-on-year after a global economic downturn hit demand for consumer electronics.
Earnings in its crucial memory chips division dropped, the company said in a statement, adding that “demand for consumer products remained weak”.
Operating profit for July to September 2022 fell to 10 trillion won (US$7 billion), down from 15.8 trillion won for the same period last year, the company said.
The results are the first year-on-year decline in profit in nearly three years for Samsung Electronics, the world’s biggest smartphone maker.
But the company said it had seen an increase in sales, which were up by 3.79 per cent from the same period last year to 76 trillion won.
The world’s biggest memory-chip maker is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled empires known as chaebols that dominate business in South Korea, Asia’s fourth-largest economy.
The conglomerate is crucial to the country’s economic health – its overall turnover is equivalent to a fifth of the national gross domestic product.
Until the second quarter of this year, Samsung, along with other tech companies, significantly benefited from strong demand for electronic devices – as well as chips that power them – during the pandemic.
But the global economy is now facing multiple challenges, including soaring inflation, rising interest rates and the growing threat of a broad debt crisis.
The situation has been exacerbated by Russia’s invasion of Ukraine — which has spurred a surge in energy prices and pushed global food prices up — along with China’s adherence to a strict zero-Covid policy.
“In 2023, demand is expected to recover to some extent, but macroeconomic uncertainties are likely to persist,” Samsung Electronics said.
“In the Memory Business, after a dampened first half, demand is expected to rebound centering on servers as data center installations resume,” it added.