Jan. 31, 2023 — Samsung Electronics today reported financial results for the fourth quarter and the fiscal year 2022. The Company posted KRW 70.46 trillion (US$57.16 billion) in consolidated revenue and KRW 4.31 trillion (US$3.5 billion) in operating profit in the quarter ended December 31, 2022. For the full year, it reported 302.23 trillion (US$245.2 billion) in annual revenue, a record high and KRW 43.38 trillion (US$35.2 billion) in operating profit.

The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown. Earnings at the Memory Business decreased sharply as prices fell and customers continued to adjust inventory. The System LSI Business also saw a decline in earnings as sales of key products were weighed down by inventory adjustments in the industry. The Foundry Business posted a new record for quarterly revenue while profit increased year-on-year on the back of advanced node capacity expansion as well as customer base and application area diversification.

The strength in the US dollar against the Korean won resulted in a positive impact of approximately KRW 0.5 trillion company-wide on operating profit compared to the previous quarter.

In the first quarter, the semiconductor business will focus on actively addressing the demand for high-end products, such as DDR5, LPDDR5x and 200 megapixel (MP) image sensors, amid a weak memory market and soft global IT demand. SDC plans to meet the demand for major customers’ new products.

For 2023, while the macroeconomic uncertainties are expected to persist, the Company anticipates demand to begin recovering in the second half. The semiconductor business will continue to reinforce market and technology leadership and expand the proportion of advanced nodes and products, such as DDR5, LPDDR5x and Gate-All-Around (GAA) processes.

The Networks Business is expected to maintain revenue growth by actively responding to new market opportunities, particularly in overseas businesses, and by reinforcing technology leadership in 5G core chips and virtualized Radio Access Network (vRAN).

The Company’s capital expenditures in 2022 reached a total of KRW 53.1 trillion, including KRW 47.9 trillion for semiconductors and KRW 2.5 trillion for displays. In the fourth quarter, capital expenditures were KRW 20.2 trillion, with KRW 18.8 trillion in semiconductors and KRW 0.4 trillion in displays. Spending on memory was concentrated on investing in P3 and P4 infrastructure, in preparation for mid- to long-term bit supply and in EUV to enhance competitiveness. Foundry investments focused on expanding the production capacity of advanced nodes at Pyeongtaek as well as on the initial capacity for 3 nanometer (nm) and the infrastructure for the Taylor site.

Memory Earnings Declined in Q4, Semiconductor to Focus on High-end Product Demand in Q1

The semiconductor businesses posted KRW 20.07 trillion in consolidated revenue and KRW 0.27 trillion in operating profit in the fourth quarter.

Overall memory demand weakened as customers continued to adjust their inventories amid deepening uncertainties in the external environment. In addition to the base effect that Bit growth was below the market level last quarter, Samsung achieved Bit growth that exceeded the market by expanding sales, focusing on server applications. But, due to worsened consumer sentiment caused by deepening macro issues, the price fell further and with the effect of a meaningful amount of inventory valuation loss, the result decreased significantly compared to the previous quarter.

For DRAM, demand for server was limited as Set build declined because of economic uncertainty and customers’ stance on inventory reduction remained. Mobile and PC demand was weak because of major customers’ continued inventory adjustments and Set build reduction. But the Company expanded the portion of cutting-edge nodes by optimizing its product portfolio and actively responded to the demand for high-density products focusing on major data centers and server OEM customers. For NAND, demand for server SSD was somewhat stagnant because of customers’ inventory adjustments.

Looking to the first quarter, customers’ inventory adjustment stance has remained unchanged as economic uncertainties continue. Although demand recovery momentum in the short-term is concerned, Samsung will continue to minimize any adverse impacts by actively addressing the demand for high-end products such as LPDDR5x, with timely preparation for fast-growing DDR5 demand for server and PC.

In 2023, based on cost competitiveness, the Memory Business plans to expand the proportion of high-value-added products by addressing the demand for high-density server SSDs, responds to the high-density trend of smartphones and PC and strengthens its market leadership.

 

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Source: Samsung Electronics