The Samsung logo is displayed on their paper during the Mobile World Congress in Barcelona, Spain, on February 28, 2024. (Photo by Joan Cros/NurPhoto via Getty Images)
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South Korean tech giant Samsung Electronics said so It expects a worse-than-expected profit in the third quarter.
In guidance issued on Tuesday, the world’s leading memory chip maker said operating profit for the quarter ending in September is expected to be 9.10 trillion won, marking a 274% surge from last year’s 2.43 trillion Korean won. However, the figure fell short of LSEG’s expectations.
Analysts polled by LSEG estimated an operating profit of 11.456 trillion Korean won ($7.7 billion) for the quarter ended Sept. 30. Samsung’s revenue for the quarter was expected to reach 81.96 trillion won ($61 billion), according to LSEG estimates.
The performance of Samsung’s memory business decreased due to “one-time costs and adverse effects,” including inventory adjustments by mobile customers and increased supply of legacy products by Chinese memory companies,” Samsung wrote in a statement.
Samsung is a leading manufacturer of memory chips, which are used in devices such as laptops and servers. It is also the world’s second largest player in the smartphone market.
Shipments of high-bandwidth memory “HBM3E” chips to major customers have also been delayed, the company added.
“Well, let’s look at the number – it’s very disappointing,” said Daniel Yoo, head of global asset allocation at Yuanta Securities Korea. He also noted that demand for the precious chips used in PCs and smartphones, which Samsung relies on, is not available globally.
“Samsung is not taking that market share as aggressively as we’ve seen in the past. That’s the biggest problem I think we’re seeing,” added Yoo.
“The company needs to remain flexible in its management of memory supply, as the collapse of mainstream DRAM will hurt Samsung more than its smaller rivals,” Macquarie Equity Research analysts said in a recent note. DRAM refers to dynamic memory chips commonly used in laptops, workstations and PCs.
Samsung has ordered its subsidiaries around the world to cut 30% of their workforce in other divisions, Reuters reported in September, citing two sources with knowledge of the matter.
Shares of Samsung Electronics listed on South Korea’s stock exchange are down 22% year to date, LSEG data showed. The company will release detailed results for the third quarter later this month.
Samsung shares fell 0.98% following the release of the guidance.