Samsung Profit Sinks 32% as Memory Chip Downturn Worsens
The largest corporation in South Korea said in a statement on Friday that operating profit decreased by 32% to 10.8 trillion won ($7.7 billion) for the three months ending in September.
On average, analysts had predicted 12.1 trillion won. Sales were 76 trillion won short of expectations.
At the end of this month, Samsung will release its complete report, which includes information on divisional performance and net profits.
Following the report, Samsung shares dropped as much as 2% in Seoul on Friday.
According to Heo Pil-Seok, CEO of Midas International Asset Management in Seoul, "this downcycle is not just driven by traditional supply and demand dynamics; it's distinct from earlier cycles owing to geopolitical uncertainties."
The US government's export regulations would further restrict the sales of IT businesses in China, and a sizable portion of the chip demand would be weakened.
The profits of memory manufacturers would further decline if AMD and Nvidia are unable to sell their processors in China.
However, Kyung Kyehyun, president of Samsung's semiconductor division, has stated that it is doubtful that the memory market would gain pace for a comeback during the course of 2019.
According to the Korea Economic Daily, Kyung informed staff members at an internal gathering that Samsung has reduced its projection for semiconductor sales in the second half of this year by 32% from its April forecast.
According to Song Myung-sup, an analyst at HI Investment & Securities, "because to the severely weak demand, clients began to cut inventory from the end of 2022," noting that DRAM and NAND prices plummeted by 15% in the third quarter.
Clients are reducing their chip orders despite significant price reductions, with the exception of a few large IT businesses.