Samsung Electronics is expected to witness a significant decline in profit for the June quarter, with a projected 96 percent drop compared to the previous year attributed to substantial losses resulting from a chip oversupply marking the weakest quarterly performance in over 14 years,
According to data from 27 analysts on Refinitiv SmartEstimate, the operating profit of the world’s leading manufacturer of memory chips, smartphones, and TVs is expected to reach 555 billion won ($427 million) for the April-June quarter. It is advisable to favor analysts known for their accuracy.
If these estimates hold true, it would represent Samsung’s lowest profit since the fourth quarter of 2008 when the company reported a consolidated operating loss of approximately 740 billion won.
TrendForce say prices for DRAM memory chips, widely used in smartphones, PCs, and servers, experienced a continued decline during the quarter, dropping approximately 13% to 18% as a result of decreased chip purchases.
Nevertheless, analysts predict that the rate of price decline has slowed compared to previous quarters and is expected to reach a bottom around the third quarter due to supply reductions by Samsung Electronics and other memory chip manufacturers. However, a significant recovery may not be seen until 2024.
Despite the current economic challenges, Samsung is actively striving to expand its share of chip demand in high-growth areas such as artificial intelligence (AI), particularly in high-bandwidth memory (HBM) and chip contract manufacturing.
The average forecast of five analysts suggests that Samsung’s mobile business is likely to achieve an operating profit of around 3.3 trillion won attributed to cost-cutting efforts in marketing, which offset a slight increase in smartphone shipments from the previous quarter when the company launched its latest flagship model.
Samsung is also planning to release its latest foldable smartphone in Seoul earlier than usual, aiming to secure a longer period in the market before rival Apple (AAPL.O) unveils its next-generation iPhone. This strategic move is expected to help Samsung dominate the high-end mobile phone market.
The tech giant is set to disclose its preliminary second-quarter earnings results on Friday, with a more comprehensive earnings report scheduled for later this month.
