October 12, 2023
Samsung Electronics’ preliminary third-quarter profit dropped a smaller-than-expected 78%, beating analyst estimates and signaling early signs of recovery in the beleaguered memory chip market.
The stock market responded positively to the news, with Samsung shares opening 3.3% higher. Analysts pointed out that memory chip prices likely bottomed in the third quarter and are showing signs of rebounding.
Samsung’s operating profit for the July-September period was estimated at 2.4 trillion won ($1.79 billion), down from 10.85 trillion won a year earlier. This outperformed the 2.1 trillion won LSEG SmartEstimate, which leans towards forecasts from consistently accurate analysts.
Analysts attributed the better-than-expected results to a shift towards more profitable, higher-end chips, such as DRAM chips used in artificial intelligence, as well as ongoing efforts to reduce the production of older legacy chips.
Some DRAM chip prices began rebounding towards the end of the last quarter, and analysts predict that NAND Flash chip prices used in data storage may also recover in the current quarter. This would mark the winding down of the severe industry downturn that commenced last year.
Samsung’s comprehensive earnings report is scheduled for release on October 31. In the meantime, the company anticipates a 13% decline in revenue, dropping to 67 trillion won compared to the same period in the previous year.
In the mobile business, Samsung is expected to report an operating profit of approximately 3 trillion won, similar to the previous year. The company’s launch of premium foldable smartphones during the quarter boosted sales despite the sluggish global smartphone market.
The sources for this piece include an article in Reuters.
