▲ This file photo, taken Aug. 10, 2021, shows the corporate logo of Samsung Electronics Co. at its office building in Seoul. (Yonhap)

(LEAD) Samsung Electronics-Q4 earnings

(LEAD) Samsung's Q4 operating profit drops nearly 70 pct on sagging demand

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SEOUL, Jan. 31 (Yonhap) -- Samsung Electronics Co. on Tuesday said its fourth-quarter operating profit plunged nearly 70 percent from a year ago, as the global economic slowdown hurt the sales of electronic devices and semiconductors that power them.

The world's largest mobile phone and memory chip maker said its October-December operating profit shrank 69 percent from a year earlier to an eight-year-low of 4.3 trillion won (US$3.49 billion).

It is the tech giant's lowest quarterly operating profit since the third quarter of 2014, and 18.6 percent lower than the average estimate by Yonhap Infomax, the financial data firm of Yonhap News Agency.

Sales fell 8 percent to 70.46 trillion won for the three months ended Dec. 31, the company said.

Samsung's chip business, which took up around 56 percent of the tech company's total profit a year ago, was hit hard as semiconductor buyers cut back on spending amid growing inventory and a supply glut drove down chip prices.

Global memory chip revenue declined 10 percent on-year last year, tech research firm Gartner said, as electronic equipment manufacturers "started to deplete memory inventory they had been holding in anticipation of stronger demand."

In the second half of last year, consumers also began to "reduce spending, with PC and smartphone demand suffering, and then enterprises started to reduce spending in anticipation of a global recession, all of which impacted overall semiconductor growth," it said.

Samsung Electronics Vice Chairman Han Jong-hee expected macroeconomic challenges to persist throughout the year.

"Samsung was dealt a heavy blow with deteriorating external factors, like weaker demand and rising costs," he said at a briefing during CES 2023 in Las Vegas early this month.

"I think this difficult business environment will continue this year as a prolonged economic slowdown and risks in supply chains increase uncertainties."

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