Samsung Electronics Co may report its third-quarter net income halved from the preceding three-month period, as weak demand hurt the main business of the largest memory chipmaker.
Samsung, which also makes home appliances and personal computers, will probably earn 2.9 trillion won (US$2.2 billion) for the full year, according to the average estimate of 24 analysts surveyed by IBES International Inc. That indicates the company will have to earn about 410 billion won in each remaining quarters, having earned a profit of 2.1 trillion won in the first half of the year.
Analysts do not predict quarterly earnings for South Korean companies and the companies do not make forecasts. Samsung will release its July to September figures on a conference call with analysts today before making a presentation at the Korea Stock Exchange at 4pm local time.
"DRAM manufacturers should be afraid of the future," said Hwang Min Seong, an analyst at ABN Amro securities in Seoul who forecast the company lost money on its semiconductor operations in the third quarter. "In the past demand was steady and supply caused the booms and busts, this time demand is coming down."
Samsung said its net income fell 45 percent in the second quarter to 880 billion won. In the third quarter last year, the company posted a record quarterly income of 1.7 trillion won.
Analysts forecast the company will post a positive net income for the third quarter this year on non-operating profits from Samsung-group affiliates in which it owns stakes.
Samsung is poised to become the last maker of dynamic random access memory, or DRAM, chips, to have to report losses from selling them for less than they cost to make. Its rivals, such as Micron Technology Inc and Hynix Semiconductor Inc, have all made losses for at least two quarters.
On Friday, Hynix said it lost US$1.3 billion in the third quarter.
Worldwide sales of dynamic random access memory chips may fall 67 percent by value this year as the global economy slows and consumer confidence was hurt by last month's terrorist attacks, said Dataquest Inc., a research firm.
The spot price of the chip used as a benchmark by investors, the 64-megabit P133, fell to US$0.59 yesterday and has been trading since May at less than the US$1.50 level that analysts estimate chips cost to build. The price fell 78 percent this year.
Samsung, which has 21 percent of the DRAM market, made a profit in the first quarter by shifting production to those memory chips that others no longer make or are unable to produce. The strategy allowed Samsung to charge higher prices.
Now demand for those chips has fallen too.
When it announced its most recent results in July, Samsung executives said that their strategy for the rest of the year would be to limit losses.
For the first time last quarter, the company said telecommunications products -- mobile phones and phone systems -- overtook semiconductor products in sales and profits.
Sales from telecommunications were 2.3 trillion won, with operating profit of 300 billion won, the company told analysts during a conference call. Sales from the semiconductor business were 2.2 trillion won, with an operating profit of 260 billion won.
Still, Samsung's other units -- the world's largest maker of liquid crystal displays and Korea's largest home-electronics maker -- are also suffering.
Prices of the flat display panels used as computer displays and televisions have slumped this year as demand for personal computers and home electronics fell. Samsung said on average the price of the industry-standard 15-inch screen has fallen more than 40 percent this year.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft