Samsung Q3 Rollercoaster: The worldwide chip glut is likely to have a big negative effect on Samsung Electronics’ (005930. KS) traditionally strong chip division, causing profits to drop by 80% from the previous year in the third quarter.
Samsung is the biggest company in the world for making memory chips, smartphones, and TVs. On Wednesday, the company will report its preliminary third-quarter results. But the company has to deal with a challenging story.
An LSEG Smart Estimate made up of predictions from 19 analysts says that operating profit will drop to a mere 2.1 trillion won ($1.56 billion) for the three months ending in September. This estimate differs significantly from the healthy 10.85 trillion won operating profit from the same quarter last year.
The big drop in profits is primarily due to Samsung’s chip business, which has always been its main source of income. This segment is projected to lose between 3 and 4 trillion won every three months. This is because the prices of memory chips have been recovering more slowly than expected.
To make things even more complicated, Samsung’s planned cuts in chip output hurt economies of scale, increasing the cost of chip production. There needed to be more than the initial decrease in work that was reported in April to fix inventory problems caused by an oversupply of chips. This caused even more cuts in the third quarter, one of the industry’s worst downturns in decades.
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A competitor of Samsung’s, Micron Technology (MU.O), recently said it expected to lose money this quarter. This made people worry about a slow rebound in end markets, especially data centers. Micron Technology is also going through the same changes as the chip industry.
Large companies in the PC and smartphone businesses are being cautious and delaying spending on new memory chips. Instead, they are using up all of their current stockpiles in readiness for an impending economic downturn. Scientists think demand will rise again by the start of the next year since stocks are pretty low.
Even with these problems, KB Securities said last month that Samsung got its first server memory chip order in a year from a data center company in North America. This finding gives people who use data centers hope that more people will buy chips.
The mobile part of Samsung’s wide range of products performs about the same. Five analysts agree on one thing: the expected running profit will be almost 3 trillion won. This toughness was shown by the smart release of high-end folding smartphones during the quarter, which increased sales even though the global smartphone market was slow. Samsung’s move into cutting-edge mobile technology shows that it can change with the times and think strategically when things go wrong.
Our Reader’s Queries
What are the results of Samsung 3rd quarter 2023?
Samsung Electronics has announced its financial results for the third quarter ending September 30, 2023. The company reported a total consolidated revenue of KRW 67.40 trillion, which is a 12% increase from the previous quarter. This growth can be attributed to the successful launch of new smartphones and increased sales of premium display products. Samsung’s commitment to innovation and quality has clearly paid off, as they continue to dominate the market with their cutting-edge technology.
Is Samsung’s q3 profit likely down 78% amid memory chip slump?
Samsung Electronics is expected to report a significant drop in operating profit for the third quarter of this year. The South Korean tech giant is likely to see a 77.9% decline in profits compared to the same period last year. This is largely due to the prolonged slump in memory chip prices, which has had a negative impact on the company’s bottom line. Despite this setback, Samsung remains a major player in the global electronics market and is expected to bounce back in the coming quarters.
What are the results of Samsung q3?
Samsung’s third-quarter revenue came in at 67.4 trillion Korean won, which is approximately $50 billion. This figure fell short of the 67.8 trillion Korean won that analysts polled by LSEG had predicted. Meanwhile, the company’s operating profit for the same period was 2.43 trillion Korean won, which exceeded the 2.3 trillion Korean won expected by LSEG analysts. Despite missing revenue estimates, Samsung’s strong operating profit suggests that the company is still performing well.
Why is Samsung profits down?
The semiconductor industry, which faced a severe supply shortage during the Covid pandemic, is now experiencing a surplus in certain regions. This has resulted in losses for Samsung, the world’s leading manufacturer of memory chips and smartphones. Despite its dominance in the market, the company has been unable to escape the impact of the current situation.