South Korean tech giant Samsung saw its shares rise 2.7% on Thursday despite reporting a 95% drop in quarterly operating profit due to weak smartphone demand and lower chip prices.
For the April to June period, Samsung's operating profit was KRW 668.5 billion ($524 million), down 95% from KRW 14.1 trillion a year earlier. Revenue fell 6% to KRW 77.8 trillion ($47.2 billion).
The sharp decline was driven by a drop in smartphone shipments and losses in its semiconductor division. Profit from Samsung's mobile business fell due to fading demand for its flagship Galaxy S23 devices launched in the first quarter.
However, Samsung saw some improvements in its memory business compared to the previous quarter as its focus on artificial intelligence chips led to higher DRAM shipment volumes.
For the second half of the year, Samsung expects demand to gradually recover as customer inventory adjustments wind down and new smartphone launches boost sales. But it warned that growth forecasts could be revised lower if the global economic downturn persists.
Weaker memory chip demand amid the industry's inventory corrections and the economic slowdown impacted Samsung's results, the company said. But chip shortages remain uneven and recovery times will vary by end market and chip type, according to analysts.
Samsung shares rose on investor hopes that market conditions will improve in the coming quarters. The company's executive chairman, Jay Y. Lee, received a presidential pardon last year to help address South Korea's "national economic crisis."
