Samsung said in its third-quarter earnings forecast on Wednesday that it expects operating profits to fall 77% from a year earlier as the chip market continues to slow.
The South Korean tech giant said it expects operating profit of 2.4 trillion won (1.6 billion euros) and sales of 67 trillion won (47 billion euros). ), a decrease of 12% compared to the previous year, for the third quarter.
The plunge in operating profit was likely caused by losses in its chip division, as the supply glut affecting the semiconductor market continues amid a global economic slowdown.
Towards a market recovery at the end of the year
However, Samsung’s chip division narrowed its losses from previous quarters by focusing on high-end memory chips and cutting production, analysts said, which could indicate the start of a rebound.
The world’s largest producer of memory chips recorded its worst first quarter profit in 14 years, due to a 96% drop in profits due to the slowdown in activity in the chip sector. This sharp decline continued in the second quarter, with profits falling 95%.
Samsung and other chipmakers have previously said they expect the chip market to begin to slowly recover in the second half of 2023.
Foldable smartphones to the rescue
Meanwhile, the company’s mobile business is expected to have helped pare its loss with the launch of its Galaxy Z Fold 5 and Galaxy Z Flip 5 foldable smartphones.
Samsung Display, the company’s display manufacturing arm, is also expected to post a high profit thanks to the launch of flagship phones for its customers such as Samsung and Apple.
Samsung will announce its full results for the quarter at the end of the month.
Source: “ZDNet.com”