Samsung Electronics said that sales of memory chips caused its operating profits to drop by more than 95% in the second quarter.
The company is the most important subsidiary of South Korea’s Samsung Group, which is by far the biggest of the family-run groups that run most of the business in Asia’s fourth-largest economy.
Samsung said in a statement that its operating profit from April to June was 668.5 billion won (₱28 billion), which is less than the 14.1 trillion won it made the same time last year.
The company hasn’t made less money in a quarter since the first quarter of 2009.
Samsung’s sales dropped by 22.3 percent to 60 trillion won in the second quarter, and its net profit fell by 84.5 percent to 1.72 trillion won.
The company said that low demand was to blame, but it was positive about the rest of the year.
On Thursday afternoon, Samsung’s stock was selling at a 2.29 percent gain.
In recent years, South Korean chipmakers, led by Samsung, made record profits as the prices of their goods went up.
However, the global economic slowdown has hurt sales of memory chips.
During the pandemic, people bought computers and smartphones during lockdowns, which drove up demand. This made chipmakers speed up production.
But as soon as the lockdowns were lifted, demand dropped quickly. It fell even more when inflation went up and interest rates went up.
In March, it announced plans to give $227 billion over the next 20 years to build the world’s biggest chip center in Yongin, south of Seoul.
Samsung has also been dealing with a long slump in the global smartphone market. According to industry data source Canalys, the global smartphone market shrank by 11% in the second quarter compared to the same time last year.
In April, Samsung said it would cut the number of memory chips it made by a “meaningful” amount, just like competitors SK Hynix and Micron had already done.
Even though the company’s profits have been going down, that hasn’t stopped it from making risky investments.
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