Samsung’s Semiconductor Arm Hemorrhages Billions as Tech Giant Posts Disappointing Q1 Results

Sam­sung Elec­tron­ics report­ed under­whelm­ing first quar­ter results today, dragged down by stag­ger­ing loss­es in its semi­con­duc­tor divi­sion. The tech giant post­ed con­sol­i­dat­ed sales of $47.5 bil­lion and oper­at­ing prof­it of just $477 mil­lion for the quar­ter end­ing March 2023.

Sam­sung’s Device Solu­tions (DS) divi­sion, which includes its semi­con­duc­tor and dis­play pan­el busi­ness­es, record­ed an oper­at­ing loss of $3.4 bil­lion on sales of $10.2 bil­lion. The semi­con­duc­tor unit post­ed an oper­at­ing loss of $201 mil­lion in Q4 2022 due to slow­ing demand, but loss­es bal­looned this quar­ter as excess cus­tomer inven­to­ry and eco­nom­ic head­winds crimped sales. Sam­sung expects mem­o­ry chip demand to recov­er in the lat­ter half of 2023.

Amid the dis­ap­point­ing results, Sam­sung’s mobile divi­sion proved a bright spot. The Mobile eXpe­ri­ence (MX) and Net­works divi­sion logged $23.7 bil­lion in sales and $2.9 bil­lion in oper­at­ing prof­it, dri­ven by strong sales of the pre­mi­um Galaxy S23 series, espe­cial­ly the Galaxy S23 Ultra.

Sam­sung plans to sup­port Galaxy S23 sales going for­ward while boost­ing mar­ket­ing for its fold­able phones ahead of new mod­el launch­es lat­er this year. The com­pa­ny is rumored to unveil its next fold­able device in August, in line with its usu­al prod­uct release schedule.

The mas­sive loss­es in Sam­sung’s semi­con­duc­tor busi­ness cast a shad­ow over results that would oth­er­wise be con­sid­ered sol­id, giv­en today’s eco­nom­ic cli­mate. With demand for mem­o­ry and com­po­nents in a slump, Sam­sung’s diver­si­fied busi­ness mod­el and mobile divi­sion suc­cess have insu­lat­ed the broad­er com­pa­ny from even greater tur­moil. Sam­sung will look to rebound in the sec­ond half of 2023 as chip demand picks back up and new fold­ables spur growth.