Samsung sees 23% drop in profits due to weak demand

Samsung released third-quarter financial results: record revenues but lower profits.

Samsung is posting a record third quarter of 2022 with consolidated revenues of around $54 billion, but at the same time is seeing a decline in its earnings compared to the previous quarter and year-over-year. The South Korean giant’s ($7.6 billion) operating results were down 23% quarter-on-quarter and about 31.4% year-over-year. Between July and September 2021, they were about 26% higher than the quarter before. In its financial report, the company explains that its various divisions have experienced weak demand, mainly due to global economic instability.

Samsung reports third quarter financial results

Weak demand for consumer goods and inventory adjustments resulted in lower earnings for the Memory branch. For LSI, this is due to weak demand for smartphones and TVs. SoC revenues have increased thanks to the ever-increasing interest in 5G. At the same time, the visual display department was also affected by low demand and rising costs.

Mobile subsidiary Mobile eXperience (MX) was in the spotlight last quarter. The Networks division’s consolidated revenue was $22.6 billion and operating profit was $2.27 billion, up two figures from the previous quarter. The company attributes this success to sales of the Galaxy Z Fold 4 and Z Flip 4, two devices that are growing faster than their predecessors. In addition, the Galaxy S22 line has been able to maintain “strong sales”.

Record earnings, but declining profits

The tech giant expects even better performance from its mobile division in the fourth quarter as demand for smartphones and wearables picks up at the end of the year. And since those markets as a whole should grow next year, this division should continue to pay big dividends for Samsung. The other division that performed well in the third quarter was foundry, with consolidated sales of $16 billion and operating income of $3.6 billion thanks to strong demand.

On the same day that the financial results were released, Samsung officially appointed Jay Y. Lee as Executive Chairman. This is mostly a symbolic appointment, as Jay E. Lee is the top executive of the company anyway. But as Bloomberg notes, it could help Li sign deals around the world to expand the giant’s business. Jay E. Lee, who was sentenced to five years in prison in 2017 after being found guilty of paying bribes, was granted a presidential pardon in August to help South Korea weather its economic crisis.