© Reuters. FILE PHOTO: Samsung signage is seen in a retailer in Manhattan, New York Metropolis, U.S., November 22, 2021. REUTERS/Andrew Kelly
By Joyce Lee and Heekyong Yang
SEOUL (Reuters) – Samsung Electronics (OTC:) Co Ltd reported a 31% drop in third-quarter revenue on Thursday and mentioned geopolitical uncertainties are prone to dampen demand till early 2023, as the worldwide financial downturn slashed urge for food for digital units.
The world’s high maker of reminiscence chips and smartphones mentioned that regardless of the headwinds within the international economic system, demand for its semiconductors could get well within the second half of subsequent yr as new information centres and computer systems require extra reminiscence.
“We’re not contemplating a man-made manufacturing lower,” mentioned Han Jin-man, govt vp of reminiscence enterprise at Samsung (KS:).
“Market demand has contracted proper now, however … we have to put together for mid- to long-term demand restoration.”
Samsung mentioned it didn’t anticipate any change to its 2023 reminiscence chip funding plans, in distinction to smaller rival SK Hynix, which on Wednesday warned of an “unprecedented deterioration” in reminiscence chip demand and slashed 2023 funding by greater than 50%.
For NAND flash chips, Samsung forecast the market could not get well in 2023, however mentioned it deliberate to utilise its “superior” price construction to “generate demand”.
“Samsung appears to be saying it can use this downcycle to push out different NAND flash corporations like SK Hynix and Kioxia,” mentioned Park Sung-soon, analyst at Cape Funding & Securities.
Shares in Samsung had been flat in early afternoon commerce, however SK Hynix shares fell 3.6%. The broader market was up 1.3%.
ECONOMIES OF SCALE
Though Samsung’s fourth-quarter earnings are anticipated to dip additional as reminiscence chip costs proceed to fall, Samsung shall be higher in a position to defend income than friends as a consequence of economies of scale, analysts mentioned.
Samsung is predicted to maintain capital expenditure cuts to a minimal in 2023 versus 2022 – at about 5% for reminiscence chips – to proceed its migration into extra superior manufacturing, which is able to initially curtail provides of sure chips as a consequence of new manufacturing course of, mentioned Daishin Securities analyst Wi Min-bok.
This differs from rivals SK Hynix or Micron Know-how (NASDAQ:)’s plan to probably lower funding by greater than 30% subsequent yr.
Samsung’s working revenue fell to 10.85 trillion gained ($7.7 billion) for the July-September quarter, from 15.8 trillion gained a yr earlier, the primary year-on-year decline in practically three years as its chip enterprise revenue fell to five.12 trillion gained from 10.07 trillion gained a yr earlier.
That was according to Samsung’s personal estimate of 10.8 trillion gained earlier this month. Income rose 4% to 76.8 trillion gained.
Samsung mentioned revenue in its cell enterprise fell barely to three.24 trillion gained from 3.36 trillion gained a yr earlier, as a market downturn was offset by firmer demand for high-end smartphones and newly launched wearables.
Samsung forecast 2023 cell demand might get well barely from 2022, and mentioned it deliberate to deal with its flagship and foldable smartphones to harness comparatively sturdy urge for food for premium merchandise.
In the meantime, Samsung’s de facto chief Jay Y. Lee was named govt chairman on Thursday, a symbolic transfer confirming that South Korea’s most beneficial firm shall be formally run by the third technology of its founding household.
($1 = 1,416.8000 gained)
