(Seoul) Samsung Electronics on Thursday reported a plunge in profits of more than 86 percent in the first quarter of 2023, the lowest in 14 years, citing the global economic slowdown that has hit sales of chips and electronics.

The South Korean tech giant reported that its operating profits for the January-March period fell 9,750 billion won (C$9.9 billion) from the same period a year earlier.

They stood at 1,570 billion won (1.6 billion CAN), against 11,320 billion over the same period last year (11.6 billion CAN).

In early April, the group said it expected a more pronounced drop, of 95.7% in 1 T. But this drop remains the largest in 14 years.

Samsung Electronics’ net operating income plunged 95% from a year ago to 640 billion won (CAN645 million).

Sales fell 18% over the period to 63.75 trillion won (CAN64 billion).

The company cited a drop in demand for microchips, which usually account for half of its profits, as well as a drop in their price.

Samsung’s chip arm suffered losses of 4.58 trillion won (C$4.7 billion), its first net loss since 2009, when the world was just emerging from the 2008 financial crisis.

The tech giant, however, expects a “gradual recovery” in demand for semiconductors in the second half of the year, due to customer inventory declines and customer adjustment needs.

Samsung Electronics is the flagship of the Samsung Group and by far its largest subsidiary.

South Korean chipmakers, led by Samsung, had posted record profits in recent years, fueled by soaring prices, but a slowing global economy has put a damper on the sector.

First supported by electronics purchases during the pandemic, it then slowed down, affected in particular by inflation and rising interest rates.

Also in April, Samsung announced that it would “significantly” cut memory chip production to tackle the oversupply problem.