Samsung Electronics Co yesterday said that it expected operating profits to drop more than 50 percent in the third quarter as it struggles with a long-running slump in the global chip market.
Operating profit for the July-to-September quarter was forecast to reach 7.7 trillion won (US$6.4 billion), down 56.2 percent from a year earlier, the world’s largest maker of smartphones and memory chips said in a statement.
It marks the fourth consecutive quarter in which the South Korean tech company has recorded a profit drop in the face of falling semiconductor prices and weakened demand for its mobile devices.
Sales for the third quarter were expected to reach about 62 trillion won, down 5.3 percent from the same period last year.
Samsung withholds net profit and sector-by-sector business performance until it releases its final earnings report, which is expected later this month.
Analysts voiced optimism for the coming months, saying that falling inventory levels for semiconductors — which account for more than half of Samsung’s profit — would help stabilize chip prices after double-digit drops this year.
The estimates for the third quarter showed a slight rise from the April-to-June period, which analysts attributed mainly to improvements in the mobile business.
The firm in August rolled out its flagship Note 10 devices that connect to 5G network that analysts have said have sold far better than its previous models to give Samsung a much-needed boost.
“The Note device is usually released in August or September and sells well until December, so I expect the demand to continue until the fourth quarter,” said Tom Kang, research director at Counterpoint Research.
Increased demand for Samsung’s organic LED display panels used in handsets by competitors — including Apple Inc’s new iPhone 11 — is also expected to help improve the company’s quarterly profit.
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