Samsung Electronics' operating profit for the fourth quarter of 2022 fell 69% year-over-year as profitability deteriorated due to falling purchasing demand and prices.

Samsung Electronics announced its preliminary business results for the fourth quarter of 2022 on the 6th.

Based on consolidated financial statements, sales recorded 70 trillion won, down 8.58% from the previous year, and operating profit recorded 4.3 trillion won, down 69% from the previous year.

Annual performance in 2022 showed sales of 301.77 trillion won, an increase of 7.93% compared to the previous year, and operating profit of 43.37 trillion won, a decrease of 16% compared to the previous year.

Regarding these results, the company stated that overall performance declined sharply compared to the previous quarter, as the memory business saw a significant drop in performance due to weak demand and smartphone sales slowed amidst continuing external uncertainties, such as the possibility of a global economic recession.

In the memory business, purchasing demand in the fourth quarter decreased significantly compared to expectations due to the impact of overall inventory adjustments as customers tightened their fiscal policies amid concerns over weakened consumer sentiment resulting from the continued global high interest rate environment and the outlook for an economic recession.

In addition, prices continued to fall throughout the quarter due to intensifying pressure to clear inventory caused by increased stock levels at suppliers, and the extent of the price decline was also greater than initially projected.As the rain expanded, performance also fell sharply.

In the case of MX, smartphone sales/revenue decreased due to weak demand resulting from the continuation of macro issues, and profits decreased.

The profitability of the home appliance business deteriorated due to sluggish market demand and persistent cost burdens.

Regarding these results, market experts stated that the semiconductor sector's performance deteriorated due to weak IT demand and reduced data center investment in the fourth quarter.

In addition, the decline in memory prices is expected to intensify and continue in the first quarter of 2023, leading to the first quarterly loss in the semiconductor sector since the 2008 financial crisis.

However, it was reported that as investment reduction and production cuts are underway in 2023, performance improvements for memory semiconductor companies are possible starting from the second half of 2023, and the rebound in performance in 2024, when supply shortages are maximized, is highly likely to proceed significantly compared to the industry's budget.