Samsung warns of worse than expected profits fall

Samsung executive Jonathan Gabrio at the CES 2024 technology event in Las Vegas

Technology giant Samsung Electronics says it is likely to see its profits for the last three months of 2023 fall by more than a third.

The decline is much worse than analysts expected and comes as global demand for consumer electronics remains weak.

South Korea-based Samsung is the world's largest maker of memory chips, smartphones and televisions.

The company is scheduled to release a detailed financial earnings report on 31 January.

Samsung estimated that its operating profit fell to 2.8 trillion won ($2.13bn; £1.76bn) in the October-December quarter, 35% lower compared to the same period in 2022.

It is much less than the roughly 3.7 trillion won expected by technology industry analysts.

Demand for electronic gadgets and the memory chips that go in them ramped up during Covid lockdowns as consumers bought new devices to use at home.

However, memory chip prices dropped sharply last year. This was because of a build up of large stocks of the key electronic components in the wake of the pandemic, and slower sales for devices such as laptops and mobile phones.

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That had a major impact on Samsung's earnings as it saw its operating profit for the third quarter of 2023 fall by more than 77% compared to the same period a year earlier.

In the previous quarter, the same measure of profitability plunged by 95%, which triggered Samsung to cut the number of memory chips it planned to make.

"We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured," the company said at the time.

Samsung's warning on Tuesday comes as CES, the world's biggest consumer technology trade show, gets underway in Las Vegas.

As well as being a shop window for the latest innovations, it also marks an annual gathering of the biggest players in the technology industry.

Around 130,000 visitors and 4,000 exhibitors are expected at this year's event.