SEOUL: Samsung Electronics reported a likely 96 per cent plunge in second-quarter operating profit on Friday (Jul 7), largely in line with forecasts, as an ongoing chip glut drives large losses in the tech giant’s key business despite a supply cut.
The world’s largest memory chip and smartphone maker estimated its operating profit fell to 600 billion won (US$459 million) in April to June, from 14.1 trillion won a year earlier in a short preliminary earnings statement.
It would be Samsung’s lowest profit for any quarter since a 590 billion won profit in the first quarter of 2009, according to company data.
The profit was largely in line with a 555 billion won Refinitiv SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate.
Shares in Samsung fell 1.4 per cent in early morning trade, underperforming a 0.6 per cent drop in the wider market.
Samsung is due to release detailed earnings on Jul 27.
In the January to March quarter, the company reported a whopping 4.58 trillion won loss in its chip business as memory chip prices fell further and its inventory values were slashed.
But in the second quarter, losses in Samsung’s memory chip business likely shrank slightly due to more sales of DRAM chips, used in PCs, mobile phones and servers, analysts said.
The memory chip downturn that began last year is expected to hit bottom in the third quarter, analysts said, although the rebound may start small.
“DRAM memory prices are expected to rebound in earnest from the fourth quarter, and double-digit quarterly increases are expected from the second half of 2024,” said Greg Roh, head of research at Hyundai Motor Securities.
“Unlike its competitors, (Samsung) is expected to maintain its investment in memory chips this year … which will pay off in increased market dominance in 2025.”
Revenue in April to June likely fell 22 per cent from the same period a year earlier to 60 trillion won, Samsung said in the statement.
Source: CNA
