- Samsung Electronics’ third-quarter profit is predicted to decline by 80%.
- The operational profit decreased from 10.85 trillion won in the September quarter of the previous year to 2.1 trillion.
- The cost of producing semiconductors increased due to Samsung’s reductions in chip output.
Due to losses in the tech giant’s cash cow division as a result of a global semiconductor glut, Samsung Electronics’ third-quarter profit is predicted to decline by 80%.
The operational profit decreased from 10.85 trillion won in the September quarter of the previous year to 2.1 trillion won ($1.56 billion) in the July-September quarter.
Samsung
The turnaround is the result of the semiconductor division, Samsung’s biggest revenue generator, announcing quarterly losses of between 3 trillion and 4 trillion won after memory chip prices, which had fallen to record lows, did not increase as quickly as some had anticipated.
The cost of producing semiconductors increased due to Samsung’s reductions in chip output, which also harmed economies of scale.
When rival Micron Technology predicted a quarterly loss last month, it raised worries about a slow recovery in the end markets for the maker of memory chips, like data centers.
Because of concerns about the economy, manufacturers of smartphones and personal computers have refrained from purchasing new memory chips.
Inventory levels are presently so low, though, that a recovery in demand is anticipated by the start of the next year. Samsung received its first order for server memory chips from a North American data center company in almost a year, which gives rise to optimism that chip orders from data center customers may resume soon.
