Samsung has released its earnings guidance for Q4 2022, and the numbers do not look good for the South Korean tech giant.
Operating profit is estimated to have fallen by over two-thirds compared to the same period the previous year, down from KRW 13.87 trillion ($10.9 billion) to KRW 4.3 trillion ($3.4 billion). Sales were also down by 9% to KRW 70 trillion ($55.1 billion). This marks Samsung's least profitable quarter in eight years, according to Reuters.
Impact of Economic Slowdown
The Verge tells us that the global economic slowdown has affected multiple areas of Samsung's business. Rising interest rates have reduced consumer spending on premium smartphones and other high-end tech while falling prices and a decrease in demand from device makers have hit the memory chip industry.
As the world's leading manufacturer of smartphones, TVs, and memory chips, Samsung's performance is seen as a barometer of the health of the consumer technology industry.
The same report emphasizes that Samsung's struggles come as the company faces increasing competition from Chinese tech firms such as Huawei and Xiaomi, which have been making inroads into the global smartphone market.
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In addition, the ongoing trade war between the US and China has created uncertainty for tech companies around the world, as tariffs and other trade restrictions disrupt supply chains and raise costs.
In an effort to solidify its position in the market and weather the economic downturn, the company has stated that it will be expanding its investment in its semiconductor business. To stay ahead of the curve and fuel future growth, Samsung is also concentrating on developing cutting-edge technologies like 5G, AI, and the Internet of Things.
In the long term, Samsung's diversified portfolio of businesses and strong financial position will likely help it weather the current economic challenges. However, the company will need to continue adapting and innovating to maintain its position as a global leader in the tech industry.
A Similar Trend
LG Electronics has also just released preliminary earnings data for the fourth quarter and the whole year of 2022, which shows that operating profit for the quarter is likely to go down.
LG's Q4 earnings guidance indicates comparable decreases, with operational profit falling 91.2% in the fourth quarter and overall profit down 12.6% year on year.
In Q4, the company recorded revenues of KRW 21.9 trillion, a 5.2% increase over the previous year's same quarter and the biggest quarterly revenue in the company's history. But consolidated financial statements show that the operating profit for the quarter was KRW 65.5 billion, which is about 91.2% less than the same time last year.
Despite the dip in Q4 operating profit, LG's annual revenue surpassed KRW 80 trillion for the first time in 2022, totaling KRW 83.5 trillion, a 12.9% increase over 2021.
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