- Samsung Electronics Co, Ltd SSNLF consumer-gadgets Vice Chair and co-CEO Han Jong-hee hoped the current industry downturn that affected the company's profit trajectory would begin to improve in the second half of 2023.
- Han said Samsung planned to beat current market headwinds by strengthening its integration of connected devices and related software that previously lagged behind rivals like Apple Inc AAPL, the Wall Street Journal reported.
- "A crisis usually creates a new opportunity. When everything's stable, it's hard to shake up the market order," Han told the WSJ.
- Macroeconomic challenges have hit Samsung hard in the past year, as companies and consumers curb spending on electronics after a purchase boom during the early stages of the pandemic.
- Analysts expect Samsung to report 7.18 trillion South Korean won ($5.64 billion) in operating profit in the December quarter, down 50% Y/Y, according to Refinitiv consensus.
- However, some analysts are more bearish than the consensus, CNBC reports.
- The pessimism stemmed from a rapid fall in NAND and DRAM memory prices due to demand softness for the products like PCs.
- The lack of demand led electronics manufacturers and other companies that use such chips to hold onto their inventory, further lowering demand for Samsung's chips.
- Samsung is not exempt from the "memory market carnage," Macquarie analysts said in a note.
- "The magnitude and speed of the memory price decline is parallel to the global financial crisis in 2008," Macquarie said.
- Samsung's semiconductor business, which includes NAND and DRAM, accounts for nearly 50% of the company's operating profit.
- Analysts also expect weakness in other parts of Samsung's business, including smartphones, which could weigh on earnings.
- Analysts expected a rebound in earnings in the second half of 2023 "along with an improving memory cycle and recovery in mobile demand."
- The analysts said a downturn in memory prices tends to provide an opportunity for the memory leader to come back stronger in a new cycle.
- Photo by Pierre Lecourt via Flickr
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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