Samsung’s logo is displayed at its exhibition hall during the Mobile World Congress in Barcelona, Spain, on February 28, 2024.
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South Korean technology giant Samsung Electronics said Third-quarter profit is expected to be worse than expected.
In guidance issued on Tuesday, the world’s largest memory chip maker said operating profit for the quarter ended in September was expected to be about 9.10 trillion wonan increase of 274% from last year’s 2.43 trillion won.
Samsung wrote in a statement that performance in Samsung’s memory business declined due to “one-time costs and negative impacts,” including inventory adjustments at mobile customers and increased supply of traditional products from Chinese memory companies.
Samsung is a leading maker of memory chips used in devices such as laptops and servers. It is also the world’s second-largest player in the smartphone market.
The company added that shipments of high-bandwidth memory “HBM3E” chips to major customers have also been delayed.
“Well, let’s look at the numbers – they’re very disappointing,” said Daniel Yoo, head of global asset allocation for South Korea at Yuanta Securities. He also noted that demand for traditional chips used in PCs and smartphones, on which Samsung relies, has not picked up globally.
“Samsung is not aggressively grabbing market share like we’ve seen in the past. I think that’s a big problem that we’re seeing,” Yoo added.
Analysts polled by LSEG expected operating profit for the quarter ended September 30 to be 11.456 trillion won ($7.7 billion).
“The company needs to remain flexible in its memory supply controls as the decline of traditional DRAM could hurt Samsung more than its smaller rivals,” Macquarie Equity Research analysts said in a recent note. “DRAM refers to dynamic random access memory chips, commonly used in laptops, workstations and PCs.
Reuters reported in September, citing two people familiar with the matter, that Samsung had instructed its global subsidiaries to cut 30% of its workforce in some departments.
LSEG data shows that so far this year, the share price of Samsung Electronics, which is listed on the Korean Stock Exchange, has fallen by 22%. The company is scheduled to release detailed third-quarter results later this month.
After the guidance was released, Samsung’s stock price fell 0.98%.
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