Samsung Electronics’ Run of Record Results Stalls as Global Tech Boom Fades

Samsung benefited from pandemic-era shifts and government stimulus that created a huge appetite for the company’s memory chips, smartphones and televisions. But demand across the tech industry is beginning to fall from those ferocious levels, as consumers trim spending as the costs of many essential items soar.

In the opening months of 2022, Samsung posted its highest-ever quarterly revenue of 77.8 trillion won, while operating profits grew 50%. The company’s shares have fallen roughly 28% since the start of this year.

Samsung reports full results later this month. It expects second-quarter operating profit of 14 trillion South Korean won, roughly equivalent to $10.7 billion, for the quarter ended June 30. That compares with 12.6 trillion won for the year-earlier quarter. Revenue is forecast at 77 trillion won, up from the prior year’s 63.7 trillion won, the company said.

Analysts polled by S&P Global Market Intelligence were on average expecting 14.6 trillion won in operating profit and 76.9 trillion won in revenue.

Samsung, the world’s No. 1 maker of semiconductors and smartphones, is considered a tech-industry bellwether as it is both an electronics maker and a component supplier to rivals like

Apple Inc.

Led by memory chips, the Suwon, South Korea-based company’s semiconductor business—which accounted for more than half of its annual operating profits in 2021—has enjoyed a sales boom throughout the pandemic.

The South Korean firm’s memory-chip business lost some pricing power in recent months, though it was able to offset those declines with increased shipments, said Sanjeev Rana, a senior analyst at CLSA, a Hong Kong-based brokerage. Samsung’s second-quarter semiconductor operating profit is estimated to be 10 trillion won, up 45% year-over-year, according to CLSA’s projections.

The chip industry has warned increasingly that the second half of the year will be rocky, as inflation curbs consumer appetite for many gadgets and the cryptocurrency market slides.

The same forces affecting Samsung’s semiconductor business are taking a toll on its smartphone and consumer-electronics business. Samsung was earlier expected to have shipped 68 million smartphones during the second quarter but is now likely to have shipped 62 million to 64 million units, according to Counterpoint Research, a tech-market research firm.

Total smartphone shipments world-wide were once expected to grow this year by 5% from 2021, according to Counterpoint estimates from March. Now it forecasts that industrywide shipments will fall by around 3%.

Samsung benefited from pandemic-era shifts and government stimulus that created a huge appetite for the company’s memory chips, smartphones and televisions. But demand across the tech industry is beginning to fall from those ferocious levels, as consumers trim spending as the costs of many essential items soar.

In the opening months of 2022, Samsung posted its highest-ever quarterly revenue of 77.8 trillion won, while operating profits grew 50%. The company’s shares have fallen roughly 28% since the start of this year.

Samsung reports full results later this month. It expects second-quarter operating profit of 14 trillion South Korean won, roughly equivalent to $10.7 billion, for the quarter ended June 30. That compares with 12.6 trillion won for the year-earlier quarter. Revenue is forecast at 77 trillion won, up from the prior year’s 63.7 trillion won, the company said.

Analysts polled by S&P Global Market Intelligence were on average expecting 14.6 trillion won in operating profit and 76.9 trillion won in revenue.

Samsung, the world’s No. 1 maker of semiconductors and smartphones, is considered a tech-industry bellwether as it is both an electronics maker and a component supplier to rivals like

Apple Inc.

Led by memory chips, the Suwon, South Korea-based company’s semiconductor business—which accounted for more than half of its annual operating profits in 2021—has enjoyed a sales boom throughout the pandemic.

The South Korean firm’s memory-chip business lost some pricing power in recent months, though it was able to offset those declines with increased shipments, said Sanjeev Rana, a senior analyst at CLSA, a Hong Kong-based brokerage. Samsung’s second-quarter semiconductor operating profit is estimated to be 10 trillion won, up 45% year-over-year, according to CLSA’s projections.

The chip industry has warned increasingly that the second half of the year will be rocky, as inflation curbs consumer appetite for many gadgets and the cryptocurrency market slides.

The same forces affecting Samsung’s semiconductor business are taking a toll on its smartphone and consumer-electronics business. Samsung was earlier expected to have shipped 68 million smartphones during the second quarter but is now likely to have shipped 62 million to 64 million units, according to Counterpoint Research, a tech-market research firm.

Total smartphone shipments world-wide were once expected to grow this year by 5% from 2021, according to Counterpoint estimates from March. Now it forecasts that industrywide shipments will fall by around 3%.