The decline will continue in Samsung: Earnings are expected to drop by 80 percent

One thing has been true since the beginning of the year: Global chip abundance. Production cuts continue in this semiconductor business, which is a cash cow of Samsung Electronics. It is predicted that Samsung’s profit will decrease by 80 percent in the third quarter due to reasons such as stocks still not being balanced, demand not being revived and production not returning to its previous volume.

Loss continues at Samsung

Samsung, the world’s largest memory chip, smartphone and television manufacturer, will announce its third quarter results tomorrow. On the other hand, Samsung’s operating profit in the July-September quarter will likely fall to $1.56 billion, according to LSEG SmartEstimate’s estimates from 19 analysts, dominated by those who have consistently made correct predictions. This figure was at the level of 8.05 billion dollars in the same quarter last year.

The reversal is due to a quarterly loss of $2.2 billion to $3 billion from its chip division, which has traditionally been its largest source of revenue. Analysts said that Samsung’s cuts in chip production also harmed economies of scale and increased chip production costs.

It was reported in recent weeks that Samsung, which first cut production in April, would cut further production in the third quarter to reduce stocks and overcome the chip glut that caused the worst sectoral decline in recent years. A similar situation is also experienced by Micron and SK Hynix. Smartphone and personal computer manufacturers have been avoiding purchasing new memory chips for months due to concerns about the economic downturn, preferring to use their existing inventories.

Demand for memory chips used in AI, such as high-bandwidth memory (HBM), remains strong, but Samsung is behind rival SK Hynix in developing such chips and securing customers such as AI chip leader Nvidia.

Finally, Samsung is expected to make an operating profit of around $2.2 billion on the mobile side. As it is known, Samsung launched foldable high-end phones such as Galaxy Z Fold 5 and Z Flip 5 during this period and increased its sales despite the stagnant global smartphone market. When the official figures are shared tomorrow, we will see the exact performance of the company in this quarter.