Samsung Electronics, the South Korean tech giant, has announced that it expects its third-quarter operating profit to decline by 78% compared to the same period last year. This forecast falls below market expectations and highlights the ongoing challenges faced by the company’s flagship semiconductor business.
In its preliminary earnings forecast, Samsung revealed that its operating profit for the July-September quarter is estimated to be 2.4 trillion won ($1.79 billion), significantly lower than the 10.85 trillion won profit recorded in 2022.
Market consensus forecasts compiled by FactSet had anticipated an operating profit of 2.826 trillion won for the September quarter. However, Samsung’s estimate fell short of these expectations.
Additionally, Samsung projected a 13% YoY revenue decline to 67 trillion won for the third quarter.
As the world’s largest manufacturer of memory chips, smartphones, and televisions, Samsung continues to grapple with the effects of the global tech-industry downturn, particularly within its semiconductor segment. Despite some signs of recovery, this downturn has significantly impacted the company’s once-profitable chip-making business, which reported losses for two consecutive quarters until June.
To address this challenge, Samsung has been actively cutting its overall semiconductor output to reduce inventory and stabilize memory chip prices. However, market analysts suggest that aggressive output reductions may have contributed to an increase in fixed-unit costs, further weakening the company’s earnings.
Although Samsung’s production cuts have helped chip prices start to recover gradually, the full impact on earnings remains to be seen. The company is scheduled to release its complete quarterly earnings report later this month.