Samsung Electronics Co. has reported a record loss of IDR49.9 trillion or US$3.4 billion in the memory chip division. This is due to the global technology industry slump, but Samsung believes that the industry will begin to recover by the end of 2023.
Samsung’s semiconductor division, which usually records the most successful division, has suffered an unprecedented loss of 4.58 trillion won. The company, which supplies chips to Apple and is the iPhone’s closest competitor, has reported a net profit of US$1.05 billion, lower than the average analyst estimate of 1.45 trillion won.
The global technology industry is expected to recover soon, starting with companies like Apple Inc. to Intel Corp. Samsung joins SK Hynix Inc. in predicting a rise from the technology recession that hit the world’s largest companies.
Samsung expects demand to increase gradually in various markets ranging from smartphones to PCs and storage media, driven by China’s economic recovery and accelerated development of Artificial Intelligence (AI) technology.
What caused the slump in the global memory industry, and how will it recover?
The more significant decline occurred after the explosion in internet activity and sales of devices during the Covid-19 pandemic. Inflation fears and last year’s recession also triggered a visible decline in consumer and business spending, hitting electronics sales around the world. The memory chip industry has most likely weathered the worst of weak demand, and high-end memory sales will continue to support demand pockets, especially in 2023 due to the launch of new smartphones and expansion of AI demand.
Also Read: Nokia Lumia 920: A Comprehensive Look at the Best Windows Phone
Samsung plans to maintain its investment in memory chips since last year to maintain long-term competitiveness. The company promised to cut semiconductor production to stabilize plunging chip prices. Samsung has also planned to cut spending during the recession to protect its profits.
What are the industry’s current sentiments, and how does Samsung’s prediction factor in?
Spot memory prices rebounded for the first time in 13 months shortly after Samsung’s announcement. On Wednesday (26/4/2023), Hynix added to this sentiment after reporting a decline in revenue that was not as bad as feared. The company said it sees memory prices bottoming out this quarter. Similarly, Micron Technology Inc., the largest US maker of memory chips, has said that client inventories are declining.
Samsung’s shares have not changed much on the Seoul trading exchange, although they have been directly impacted. However, the company’s more optimistic predictions about PC and mobile demand fuel hopes that the industry will emerge from its slump by 2023.
The recovery still depends on the economic recovery in China, the world’s largest market for PCs and smartphones. It is starting to become evident, but the recovery has not been evenly distributed. In the second half of 2023, the smartphone market is expected to increase in both volume and value amid signs of recovery in the global economy, according to a Samsung statement.
