Samsung committed to investing in semiconductors despite crash in demand for consumer gadgets

Samsung Electronics will continue investing in the production of computer chips, despite profits from sales of the computer component sinking to their lowest since 2009.

The world’s largest chipmaker reported £178bn (270bn won) in fourth-quarter semiconductor earnings on Tuesday, down from 8.83 trillion won from the same period last year.

Samsung said demand has significantly lessened as customers cut back on electronics amid a gloomy economic downturn caused by rising inflation and interest rates. Semiconductor chips are used in most of today’s computerised gadgets, from smartphones to cars.

While the Korean firm expects the impacts of the poor economic conditions to carry on in the near future, it says it will spend a “similar amount of capital” to last year because it believes market demand to recover in the second half of 2023.

Jaejune Kim, Samsung executive vice-president, said market conditions were “not favourable” for the year ahead, but gave the company “a good opportunity to thoroughly prepare for the future”.

“We will continue to invest in infrastructure to meet mid-to-long-term demand,” Kim added.

Samsung spent 47.9 trillion won or on their huge semiconductor business in 2022.

The semiconductor industry has had a turbulent ride over the last few months as it wrestled with a short supply, prompted by the pandemic, up until recently.

However, it now faces a vast surplus problem as the overcompensation of providers is could with dried up demand as a result of poor market conditions.

The Korean company also said smartphone sales were down and it anticipates handset demand to decline in 2023 too due to “economic slowdown in major regions”.

Rival Korean tech giant SK Hynix has announced it plans to cut its chip production and Intel, the second largest global provider of chips, has said its current quarter will see a loss.