Since the early months of this year, Samsung has been experiencing struggles attributable to some factors, and in second quarter of 2023 the company saw its earnings fall by 95% for the second consecutive quarter.
Samsung disclosed the 95% decline in earnings in its 2023 second-quarter financial report.
The company’s earnings have dropped by more than 90% for the second time in a row. The South Korean conglomerate had an operational profit of KRW 0.67 trillion ($523.5 million) in the first quarter, down from KRW 14.12 trillion ($11.06 billion) in the same period in the previous year.
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The company claimed the steep reduction was due to a continued slump in smartphone shipments, with the boost from the Galaxy S23 Ultra in the previous quarter apparently “faded.”
According to the company’s statement “Sales decreased sequentially for the MX Business as the effect of the Galaxy S23 launch from Q1 faded. Mass market recovery was also delayed due to the continued economic downturn, affecting Q2 sales. Nevertheless, the Galaxy S23 series was able to achieve higher results than its predecessor in the first half, in terms of both volume and value.”
Samsung sees its recently released foldable smartphones, Galaxy Z Flip5 and Galaxy Z Fold5, as contributing to increased sales. “The MX Business will focus on the newly launched Galaxy Z Flip 5 and Galaxy Z Fold 5 series — which feature refined and differentiated user experiences – further fortifying its leadership in the global foldable smartphone market,” said the company in its earnings release.
Anticipation for increase profitability
The smartphone division at Samsung has been underperforming as of late. However, the sharp decline in profitability cannot be attributed only to a decrease in smartphone sales. Much of the effect that the decreasing smartphone industry is having on Samsung comes from sources other than the company’s own Galaxy smartphones.
Memory and storage for competing smartphone brands are mostly provided by Samsung Electronics. Through its subsidiary, Samsung Display, the corporation is also a major provider of screens to other companies like Apple. Thus, Samsung has been affected by the industry-wide slowdown in smartphone sales.
The global market for smartphones is declining. IDC, Counterpoint Research, and Strategy Analytics is just a few of the research companies whose recent findings point to a declining smartphone industry.
On a more optimistic note, the reports suggest that the darkest moments may be over for the segment with anticipation for upward growth. There is potential for an increase in profitability led by the component sector as global demand begins to revive in the second part of the year. According to the reports, the premium market is showing signs of recovery.