Monday, 14 October, 2019


Samsung Electronics expects 56% drop in Q3 operating profit

Samsung Beats Estimates as Demand Picks Up for Note IPhone Samsung profit tumbles as memory chip business suffers from low demand
Conrad Doyle | 08 October, 2019, 22:25

Samsung Electronics estimated on October 8 that its operating profit will likely stand at 7.7 trillion won ($6.4billion) in the July-September period, down 56.2 percent on-year.

Some analysts are more cautious about the outlook for the global memory chip business, which remains clouded by U.S. -Sino trade conflict and provides two thirds of Samsung's profit.

Samsung Electronics flagged slightly better than expected third quarter profit on Tuesday, helped by strong sales of its new Galaxy Note 10 smartphone series even as a slump in its memory chip business continued to weigh on earnings. This is lower than the record of 17.6 trillion won ($14.7 billion) in the same period a year ago.

Detailed earnings on each business unit would be announced later this month after an external audit and the board of directors' approval.

Samsung is the world's biggest maker of semiconductors and smartphones, but it has struggled with falling prices for DRAM and NAND memory chips since late previous year.

"It looks like Samsung Electronics has bottomed out", said an industry watcher who asked not to be named, adding that its earnings would recover next year after a seasonal slowdown during the fourth quarter.

It tumbled 56.2 percent compared with the same quarter of a year ago when Samsung recorded its record operating profit, but it was up 16.7 percent from the previous quarter.

While chip prices remained low, shipments had actually increased due to sector jitters.

Samsung launched its top-end S10 5G smartphone earlier this year, after South Korea won the global race to commercially launch the world's first nationwide 5G network. However, during the same period past year, Samsung Electronics posted some of its largest ever profits and sales.

An ongoing trade war between the USA and China and export curbs by Japan on key industrial materials crucial for the production of chips and displays have also made it harder for the market to gauge demand, the watchers said. It held a 20 percent market share back in 2013, but saw that dominance plummet to just 1% in 2018. In preparation for that report, the company released an official forecast for investors that gives us a little bit of an idea of what to expect.

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