Samsung Warns of 96% Drop in Quarterly Operating Profit Amid Global Chip Demand Plunge

Samsung Electronics Co. Ltd., one of the world’s leading technology companies, has just announced its financial year results for 2020, and it’s not good news. With an unexpected drop in profits and revenues, the South Korean tech giant has faced one of its most challenging years. From pandemic-related production setbacks to growing competition from rivals such as Apple and Xiaomi, Samsung has encountered several headwinds that have been tough to weather. This article delves into the factors that have contributed to Samsung’s terrible financial year and explores what the company can do to regain its market position.


According to preliminary estimates from Samsung Electronics, the company is experiencing another difficult quarter with a 96% decrease in quarterly operating profit compared to the same period last year, primarily due to a global drop in chip demand which even sales of their new Galaxy S23 series was unable to offset. The decrease in semiconductor demand is a result of the post-COVID economic slowdown and swollen chip inventories for companies like Samsung. The oversupply has led to lower prices, which in turn has hurt corporate profits. Despite this, Samsung has still made a considerable amount of money, with operating profit estimated at 600 billion won (approx. $456 million), the lowest in 14 years. Samsung plans to address the oversupply by cutting memory chip production to a “meaningful level” while still investing in infrastructure to secure cleanrooms and expand R&D investment to remain a tech leader. One positive point of the quarter was the successful sales of approximately 11 million units of the new Galaxy S23 Series, which saw a 50% increase compared to its predecessor. Samsung will release its final financial statement in the coming weeks, but the difference is not expected to be significant from the preliminary guidance.


In conclusion, Samsung’s financial year has been nothing short of disappointing. The South Korean tech giant has had to grapple with various challenges, including supply chain disruptions and sluggish demand for its key products. However, as the company prepares to enter a new fiscal year, there is hope for a turnaround. Samsung is still a formidable player in the global tech industry, and with its strong research and development capabilities, it could rebound and make a comeback. As consumers, we look forward to seeing what the future holds for Samsung and hope they can regain their position as a leading technology company.