Samsung Faces Substantial Earnings Decline in 2023 Amid Semiconductor Challenges and Market Dynamics

Samsung Electronics, the South Korean tech giant, reported a significant decline in earnings for the past year, primarily attributed to weakened global demand for locally-produced semiconductors, resulting in a chip-making division deficit.

The company disclosed on Wednesday that its consolidated operating profit plummeted by 84.9 percent year-on-year to 6.57 trillion won (4.9 billion U.S. dollars) in 2023, marking the lowest figure in 15 years since 2008's global financial crisis. Total revenue decreased by 14.3 percent to 258.94 trillion won (194.3 billion dollars), and net income saw a substantial drop of 72.2 percent to 15.49 trillion won (11.6 billion dollars) last year.

In the October-December quarter alone, operating profit fell by 34.4 percent to 2.82 trillion won (2.1 billion dollars), missing market expectations. The semiconductor business reported an operating loss of 2.18 trillion won (1.6 billion dollars) in the fourth quarter, contributing to an overall loss of 14.87 trillion won (11.2 billion dollars) for the entire year. Despite a recovery in the memory chip business in the fourth quarter, Samsung faced challenges in its mobile phone and networks division, with a decline in both sales and profit.

The company aims to lead the AI smartphone market by integrating Galaxy AI into the Galaxy S24 series. Additionally, the TV and digital appliances unit incurred an operating loss, mainly attributed to weakened overall TV demand and increased costs amid intensified competition. Samsung's total capital expenditure for 2023 amounted to 53.1 trillion won (39.9 billion dollars), with significant investments in the semiconductor unit and display panel division.