Korean tech giant Samsung is worried that its profits could fall by 32% due to a decrease in demand for electronic devices and, therefore, memory chips, because of the global economic slump. Inflation, rising consumer costs, and economic uncertainty have led consumers to decrease their spending.
The price of memory chips has fallen due to the dip in demand for the technology. Samsung estimates quarterly profits of $7.6 billion but will release its full earnings report on 27th October. This shift in consumer habits could mark Samsung’s first year-on-year quarterly profit drop in around three years.
Other tech companies have announced lower profits in response to weakening demand for PC components and other electronic devices. For example, U.S. chip maker Advanced Micro Devices (AMD)’s shares dropped by 10.83% this week.
Neil Shah from market analysis firm Counterpoint Research stated, “This is going to be a common theme for companies in the second half of 2022 due to weakening consumer demand.”
Many electronics manufacturing companies have reduced their memory chip orders in response to lower computer and cell phone sales this year. Memory chip prices are expected to continue falling until demand picks up, most likely not until 2023.