Samsung released its Q4 2022 financial report, which showed that their profits from the chip business had crumbled, the lowest in history since Q1 2009.
The financial report revealed that Samsung's profit from the chip business fell to 270 billion won, even though in Q4 2021 they received 8.83 trillion won, or their lowest profit since Q1 2009.
The reason for this huge decline was the price of chips which plunged by a double-digit percentage in 2022, we were quoted as saying by Reuters, Tuesday (31/1/2023).
In addition, the weak demand for mobile phones also had an impact on their chip business. Samsung said that demand for cellphones will decrease year on year due to weak economic conditions in major countries.
In total, Samsung's profit from October to December was 4.3 trillion won, or the lowest in eight years. Their income fell 8% to 70.5 trillion won.
A number of analysts quoted by Reuters estimate that the chip business will record a loss in Q1 2023. Even so, Samsung in its statement said it had no plans to reduce the amount of investment in the chip business for 2023.
"Samsung may see this as the right time to increase its market share, which will help them in the long term, to beat SK Hynix and Micron," said Choi Yoo-june, an analyst at Shinhan Securities.
Greg Roh, head of research at Hyundai Motor Securities, estimates that Samsung Electronics' market share will reach 40% for DRAM chips and around 30% for NAND flash chips in the second half of 2023.
To cope with weak demand and plunging chip prices, Samsung will make adjustments to its maintenance line, equipment and shift to more sophisticated chip manufacturing processes.
They will also increase their capital investment proportionately for research and development.