Samsung's quarterly profit falls by 2/3 to an 8-year low

South Korea's Samsung announced that quarterly profits are expected to fall by two-thirds, reaching their lowest level in eight years. The reason is the weakening of the global economy, which had a negative impact on the price of memory chips and limited demand for electronic devices manufactured by the company, according to Reuters.

The company said its October-December profit is likely to fall 69 percent to 4.3 trillion won ($3.37 billion) from 13.87 trillion won ($11.5 billion) a year earlier. This is Samsung's smallest quarterly profit since the third trimester of 2023.

“It’s been a tough time for all of Samsung's divisions, especially for chips and mobile devices,” said Lee Min-hee, an analyst at BNK Investment & Securities.

The company's quarterly revenue is forecast to be down 9 percent from a year ago. Asia's fourth-largest company by market value will release detailed earnings information on Jan. 31.

The agency said rising global interest rates and the cost of living have reduced demand for smartphones and other devices Samsung makes, as well as demand for semiconductors the company supplies to rivals such as Apple Inc.

For the memory chip business, the decline in demand in the fourth quarter was larger than expected as customers adjusted their inventories to further reduce financial costs, Samsung said in a statement.

The company also clarified that profits in its mobile devices business also declined in the fourth quarter as smartphone sales and revenue declined due to weak demand caused by continued macroeconomic problems.

Memory chip prices fell 20 percent during the quarter, and high-end phones with foldable screens sold poorly, Lee said, adding that Samsung's display business was hit by Apple customers during the quarter, due to production delays at the world's largest iPhone plant in China.

According to Reuters, at least three analysts predicted that Samsung's profits would fall again in the current quarter, which could lead to losses in the chip business as a glut of chips in the market would cause prices to fall further.