Samsung profits remain weak in the third quarter, the decline in chip prices continues

Samsung said on Wednesday, in its earnings forecast for the third quarter, that it expects its operating profits to fall by 77% compared to the previous year, due to the continued slowdown in the chip market.

The South Korean technology giant said it expects an 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 against the backdrop of a global economic downturn.

Towards a recovery of the market at the end of the year

However, Samsung’s chip division has reduced its losses compared to previous quarters by focusing on high-end memory chips and reducing its production, according to analysts, which could indicate the beginning of a rebound.

The world’s largest producer of memory chips recorded its worst profit in 14 years in the first quarter, due to a 96% drop in profits due to the slowdown in activity in the chip sector. This sharp fall continued in the second quarter, with a 95% drop in profits.

Samsung and other chipmakers have said previously that they expect the chip market to start recovering slowly in the second half of 2023.

Foldable smartphones to the rescue

In the meantime, the company’s mobile business should have helped to reduce its loss thanks to the launch of its Galaxy Z Fold 5 and Galaxy Z Flip 5 foldable smartphones.

Samsung Display, the company’s branch specializing in the manufacture of displays, is also expected to record a high profit thanks to the launch of flagship phones from 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 “