Stunning: Samsung China Sales Drop $900M in H1 2023
As per recent reports from South Korean media, Samsung Electronics has unveiled its latest semi-annual financial update, revealing a total sales figure of 17.808 trillion Korean won (approximately $13.3 billion USD) for the first half of the current year within the Chinese market. This marks a notable decrease of 12.654 trillion Korean won (about $8.96 billion USD), representing a significant 41.5% decline compared to the previous year's sales of 30.462 trillion Korean won (approximately $22.76 billion USD) during the same timeframe. Notably, this is the second instance in recent years where Samsung's half-year sales in China have dipped below the 17 trillion Korean won threshold; the prior occurrence was in 2019, when sales registered at 17.814 trillion Korean won. This downward shift reflects a 4.7 percentage point decrease in the overall sales ratio, declining from 26.4% to 21.7% as compared to the preceding year.
Concurrently, Samsung's market presence in the Americas has now surpassed that of China. While both China and the United States have traditionally stood as the key sources of Samsung Electronics' sales, China held a slightly higher market share of 29.2% in 2021 compared to the Americas' 29.9%. However, the dynamics changed by the conclusion of 2022, with the Americas taking the lead at 31.1% as opposed to China's 25.8%.
Within the scope of Samsung Electronics' cumulative sales of 81.8978 trillion Korean won (approximately $61.1 billion USD) for the first half of the current year, encompassing both domestic and export components, the Chinese market contributed 17.808 trillion Korean won (21.7%) to the total. Notably, this figure stands lower than the 29.9% share from China at the close of 2021, signifying a consistent decline. It's worth noting that this proportion is even lower than the substantial drop observed in 2019, which recorded a 24.9% contribution.
In addition, Samsung's subsidiary focused on semiconductor production and sales in China has experienced a significant decline. For the first half of the current year, the sales of Shanghai Samsung Semiconductor, which operates within the semiconductor and display sectors, reached 6.59 trillion Korean won (approximately $4.92 billion USD). This denotes a substantial decline of 49.5% in comparison to the 13.55 trillion Korean won (approximately $10.11 billion USD) recorded during the same period the previous year. Concurrently, net profits for this period decreased by 16.6%, transitioning from 1.38 trillion Korean won (approximately $1.03 billion USD) to 1.15 trillion Korean won (approximately $860 million USD).
Furthermore, Samsung has also undertaken a reduction in its operational entities within China. According to data compiled by the Korean CXO Research Institute, the number of Samsung's affiliated companies in China has decreased from 87 in 2018 to 65 in the present year, signifying a reduction of 22 entities over a span of five years.
Given the prevailing circumstances, Samsung Electronics established a China Business Innovation Team, led by Vice Chairman Lee, in late 2021. However, its impact seems to be somewhat constrained. The team's core objective lies in overseeing products, brands, distribution networks, personnel, and investments within the Chinese market. Yet, tangible solutions to the challenges encountered by Samsung's China business have not yet emerged. Particularly noteworthy is the semiconductor business, which faces difficulties during market downturns. Moreover, the smartphone market share remains confined to the 0-1% range, leading to heightened concerns about local operations in light of pronounced declines in Chinese sales.
