Samsung Reports Smaller-than-Expected Drop in Q3 Profit, Indicating Chip Market Recovery
Samsung’s Preliminary Q3 Profit Falls by 78% Amidst Signs of Chip Market Recovery
Samsung Electronics announced on Wednesday that its preliminary third-quarter profit dropped by a smaller-than-expected 78%. This decline indicates early signs of recovery in the battered memory chip market, which has been facing a severe downturn.
Samsung Shares Rise as Memory Chip Prices Likely Bottom Out
Samsung shares opened 3.3% higher compared to a 1.4% rise in the wider market. Analysts believe that memory chip prices likely bottomed out in the third quarter, with some types already showing signs of rebounding. This positive trend has renewed hope in the industry.
Operating Profit Estimated at 2.4 Trillion Won
The world’s largest memory chip and smartphone maker estimated its operating profit to be 2.4 trillion won ($1.79 billion) in the July-September period. This is a significant drop from 10.85 trillion won recorded a year earlier. However, the profit surpassed the 2.1 trillion won LSEG SmartEstimate, indicating a better performance than expected.
Memory Chip Business Recovery and Future Outlook
Analyst Ko Yeongmin from Daol Investment & Securities stated that although the chip business situation is not ideal, the decline in memory prices is easing, and further drops will be limited. Samsung’s third-quarter profit, although significantly lower than last year, was well above the first and second quarter’s figures. This suggests a potential recovery in the memory chip business.
Rebound in DRAM and NAND Flash Chip Prices
In the third quarter, Samsung focused on more profitable, higher-end chips such as DRAM chips used in artificial intelligence. This strategic approach, coupled with the continuous reduction in production of older legacy chips, led to a shrinking loss in the memory chip business. Additionally, analysts predict a rebound in prices of DRAM chips and NAND Flash chips used in data storage.
A Positive Outlook for Samsung’s Mobile Business
Samsung’s mobile business is expected to report an operating profit of around 3 trillion won, similar to last year. The company’s launch of premium foldable smartphones during the quarter helped generate sales despite the sluggish global smartphone market. The third quarter is generally strong for Samsung’s mobile and display businesses due to flagship smartphone launches and increased demand for display panels from clients like Apple.
Samsung aims to release its detailed earnings on October 31. The company’s revenue is estimated to have fallen 13% from the same period last year, amounting to 67 trillion won.
Overall, Samsung’s preliminary Q3 profit decline is more favorable than anticipated, suggesting the beginning of a recovery in the memory chip market. With the rebound in chip prices and the positive performance of the mobile business, Samsung is well-positioned for a more prosperous future.