People walk past the Samsung logo displayed on a glass door at the corporate’s Seocho constructing in Seoul on October 7, 2022.
Jung Yeon-je | Afp | Getty Images
Samsung Electronics reported a 31% drop in third-quarter profit on Thursday and said geopolitical uncertainties are more likely to dampen demand until early 2023, as the worldwide economic downturn slashed appetite for electronic devices.
The world’s top maker of memory chips and smartphones said that despite the headwinds in the worldwide economy, demand for its semiconductors may recuperate later next 12 months as recent data centers and computers require more memory.
This was relatively more upbeat than its smaller rival SK Hynix, which warned of an “unprecedented deterioration” in memory chip demand and slashed investment by greater than 50% on Wednesday.
Samsung’s operating profit fell to 10.85 trillion won ($7.7 billion) for the July-September quarter, from 15.8 trillion won a 12 months earlier, the primary year-on-year decline in nearly three years.
That was in keeping with Samsung’s own estimate of 10.8 trillion won earlier this month. Revenue rose 4% to 76.8 trillion won.
Profit in its chip business fell to five.12 trillion won from 10.07 trillion won a 12 months earlier.
Although Samsung’s fourth-quarter earnings are expected to dip further as memory chip prices proceed to fall, Samsung can be higher capable of defend profits than peers as a consequence of economies of scale, analysts said.
Samsung is anticipated to maintain capital expenditure cuts to a minimum in 2023 versus 2022 — at about 5% for memory chips — to proceed its migration into more advanced manufacturing, which can initially curtail supplies of certain chips as a consequence of recent production process, said Daishin Securities analyst Wi Min-bok.
This differs from rivals SK Hynix or Micron Technology‘s plan to potentially cut investment by greater than 30% next 12 months.
Samsung said profit in its mobile business fell barely to three.24 trillion won from 3.36 trillion won a 12 months earlier, as a market downturn was offset by firmer demand for high-end smartphones and newly launched wearables.
Samsung forecast fourth-quarter demand for smartphones and wearables will increase from the previous quarter despite economic instability, because the year-end holiday season approaches.
