The smartphone market has fallen on hard times. Due to many factors that have been encountered in the past three years, the market as a whole is experiencing serious problems. All this leads to a drop in demand and drags along the entire cost chain for business. And the market is gradually becoming oversaturated, because everyone who needs them already has smartphones, and the industry itself cannot offer something fundamentally new. Almost all smartphone manufacturers that are currently on the market suffer from this to one degree or another. Among them, Samsung stands apart, which is the world’s largest sales leader.
Samsung financial report
Now that the South Korean company has reported its first-quarter financials, we can draw some conclusions about how it’s doing. And against this background, to understand what exactly is happening in the industry as a whole.
According to a CNBC report, Samsung experienced a sharp drop in profits in the first quarter of 2023. Compared to the first quarter of last year, the decline in profits was 95%, which is somewhat scary. But there is always an explanation for this.
How Much Money Samsung Gets
So, for the first quarter of 2022, the tech giant made a profit of 14.12 trillion Korean won (approximately 10.7 billion dollars ). However, this year the company reported a profit of only 640 billion Korean won (approximately $479 million ). This is Samsung’s lowest operating profit for the first quarter since 2009. That this is happening for the first time in 14 years speaks to the depth of the hole into which the industry as a whole and Samsung in particular have fallen.
While Samsung is well known for its Galaxy phones, it doesn’t seem to have played a role in the decline in revenue. The launch of the Galaxy S23 series really helped. It is reported that mobile business revenue grew by 22% and operating profit increased by 3% compared to last year.
Does anyone buy expensive phones
The premium market grew in both volume and value even amid weak demand for smartphones driven by ongoing macroeconomic uncertainty. Sales rose and margins rebounded to double digits, driven by strong sales of new premium models, most notably the S23 Ultra , and efforts to improve operational efficiency.
The real culprit for the drop in earnings appears to be Samsung’s chip division. In addition to selling phones, Samsung manufactures televisions, computers, and home appliances. But its core business is components like chips and displays.
Samsung posted a loss of 4.58 trillion Korean won ( $3.4 billion ) in this department. The company made a profit of 8.45 trillion Korean won ( $6.3 billion ) last year. The loss is related to the pandemic, which forced the company to stockpile chips at a time of increased demand. Now prices have dropped, and Samsung is forced to somehow rake in the surplus that it has formed, but at the same time, few people need it at this stage.
So far, we can only say that despite Samsung’s huge earnings, they have fallen significantly. According to rumors, the company is preparing something new and should take its processor division to the next level by 2025. If the bet is made correctly, and against the background of the fact that few people are worried about the fall in profits, we can conclude that very soon we will face a new round of competition in the processor market. Interesting to see what comes of it.
