South Korea’s Samsung Electronics third-quarter operating profit fell 78 percent year-on-year to 2.4 trillion won. However, the results were better than analysts expected, as the memory chip market shows the first signs of recovery after a significant decline. This follows from the preliminary results published by the company today.
Last year, between July and September, the operating profit of the world’s largest manufacturer of memory chips and smartphones was 10.9 trillion won (€7.6 million). Samsung’s third-quarter sales fell 13 percent year-on-year to 67 trillion won (47 million euros).
Analysts polled by LSEG SmartEstimate expected a profit of 2.1 trillion won. The results are also significantly better than in the first and second quarters. In the first quarter, operating profit fell to 640 billion won, the lowest since 2009. In the second quarter, it was 670 billion won.
Reuters reported that the decline in profit was mainly due to the persistent glut of chips in the market, which is causing heavy losses in an important segment of the South Korean technology giant. The global economic slowdown and higher interest rates have had a negative impact on demand for most consumer goods, prompting chipmakers to cut production to avoid a sharp price drop. But analysts warn that the prices of memory chips probably bounced off the bottom in the third quarter and the prices of some tips have started to recover.
The chip division posted a loss of 4.58 trillion won in the first quarter and 4.36 trillion won in the second. But in the third quarter, analysts said the loss appeared to have narrowed to about three trillion won as Samsung focused on more profitable and advanced chips, such as DRAM chips used in artificial intelligence, and cut production of older chips.