Samsung’s quarterly profit expected to drop 25%, first drop in nearly three years

  • Profit likely down 25% to 11.8 trillion won -Refinitiv SmartEstimate
  • That would be the lowest quarterly profit since Q1 2021
  • Third-quarter chip revenue expected to drop 32% – analysts estimate
  • Mobile company profits could fall 17% – analysts estimate

SEOUL, Oct 6 (Reuters) – Samsung Electronics Co Ltd’s (005930.KS) third-quarter profit could fall 25%, the first year-on-year decline in nearly three years, as a Economic downturn is undermining demand for electronic devices and the chips that power them.

Globally, inflation is on the rise, central banks are aggressively raising interest rates, recession fears are growing, and uncertainty about the fallout from Russia’s invasion of Ukraine is rife. As a result, businesses and consumers have reined in their spending.

Operating profit for Samsung, the world’s biggest maker of memory chips and smartphones, likely fell to 11.8 trillion won ($8.3 billion) in the July-September quarter, according to a Refinitiv SmartEstimate. 22 analysts.

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“As the world’s largest memory chip maker, leader in OLED screens for TVs and mobiles, and leader in smartphone shipments, Samsung is very economically sensitive, with profits easily tied to demand,” said Greg. Roh, head of research at Hyundai Motor Securities. .

This would be the first drop in earnings since the first quarter of 2020, at the start of the pandemic, and the lowest level of quarterly profit since the first quarter of 2021. Until this last quarter, strong demand for devices , as people were forced to stay at home generated big profit gains for the South Korean tech giant.

Operating profit for Samsung’s chip business likely fell nearly a third to 6.8 trillion won, according to an average of seven estimates.

Prices for some DRAM memory chips, widely used in smartphones and PCs, fell 14% in the quarter while prices for NAND flash chips, used in data storage, fell 8%, according to TrendForce data.

Shares of Samsung, which will report preliminary results around 8:40 a.m. local time on Friday (2340 GMT Thursday), have fallen about 30% this year. That compares to a 37% drop for the Philadelphia Semiconductor Index (.SOX).

Samsung’s mobile business is also expected to see profits tumble with forecasts predicting a 17% drop to 2.8 trillion won, although the launch of the company’s pricey new foldable phones in the quarter boosted the price by average sale.

Kim Yang-jae, an analyst at Daol Investment & Securities, estimates that Samsung’s smartphone shipments fell 11% in the quarter from the same period a year earlier to around 62.6 million smartphones after distribution channels cut orders.

Last week, memory chip rival Micron Technology (MU.O) drastically cut investment for next year and warned of tougher times ahead.

($1 = 1,421.5600 won)

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Reporting by Joyce Lee; Editing by Edwina Gibbs

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