Samsung Expected To Report 80% Profit Plunge As Losses Mount At Chip Business

According to analyst forecasts, Samsung Electronics is expected to report a nearly 80% plunge in earnings in the third quarter. CNBC reports: The South Korean technology giant will issue earnings guidance on Wednesday. Analysts polled by LSEG expect operating profit of 2.3 trillion Korean won ($1.7 billion) for the September quarter, a 78.7% year-on-year decline. Revenue is expected to come in at 67.8 trillion won, a fall of 11.6%, according to LSEG consensus forecasts.

Samsung's semiconductor business -- typically the company's cash cow -- is expected to post a more than 3 trillion won loss for the third quarter, according to analyst forecasts, as it continues to face headwinds. Memory chip prices have fallen dramatically this year due to a glut caused by oversupply and low demand for end products like smartphones and laptops. This has hit Samsung's profits hard. In its last earnings reports in July, the company predicted a pick-up in demand for chips in the second half of the year, although this does not appear to be playing out as fast as many had hoped.

The tech giant has cut production in a bid to help shore up prices, though the effect is not likely to be seen in the third-quarter results. Daiwa Capital Markets said in a note earlier this month that it expects Samsung earnings to miss consensus estimates "due to the higher cost burden from the memory production cut and ongoing soft demand" for its chip manufacturing unit, known as the foundry business. Daiwa analyst SK Kim sees operating profit for the third quarter at 1.65 trillion won, much lower than the average analyst estimate of 2.3 trillion won.

Who cares?

[klipclop]

An 80% plunge in profits means they're still making oodles of money. The big question is whether their profit levels have reverted back to the mean after the last few years of work from home related profit boosts. Give A+ for playing wallstreets game that profits need to be growing year over year until infinity though.

Re:

[NFN_NLN]

> For the second consecutive quarter, Samsung reported a 95% decline in year-over-year profits.
https://slashdot.org/story/23/... [slashdot.org]

> An 80% plunge in profits means they're still making oodles of money.

I would say you're out of touch, but that trophy goes to this person:
https://slashdot.org/comments.... [slashdot.org]

Re:

[jd]

$1.7 billion profit (so total after all expenses have been subtracted out) isn't terrible. I mean, I could survive for quite some time if I had $1.7 billion.

But, yeah, it's definitely not good. Cutting production will work if demand doesn't sharply rise again (since it takes quite a long time to ramp up production). The company will have far better accountants than I'd have ever made, so I won't presume to tell them their business, but it always concerns me when I see a jittery economy lead to jittery corpo

Re:

[K. S. Kyosuke]

If you have $1.05B revenue and $1B expenses and your revenue drops by $40M, you've lost 80% of your profits. And yet, your revenue is virtually unchanged. So "80% drop in profit" tells you virtually nothing useful.

Re:Who cares?

[hey!]

Plus, it's a chaebol [wikipedia.org], enterprises owned by economic oligarchs who have high ranking politicians in their pocket and grind the lifeblood out of their work force. The last chairman of Samsung was convicted multiple times of corruption and tax evasion only to be pardoned each time.

The Chaebol system is so bad I avoid Korean goods if I can.

Re:

[rsilvergun]

The United States does the same thing, we just don't have a name for it. I would be shocked to find China doesn't do it too.

Not saying we shouldn't do anything about it, just that it's less a Korean thing and more a human thing. Winners tend to pass down their winnings and their kids use those winnings to lock challengers out of the game. And usually the 1st Winner is just whoever was lucky, violent or both.

As the saying goes, never ask a man how he made his first million.

Re:

[rsmith-mac]

It's a short article, so I'd encourage you to read it. But, in short, the concern is that their entire semiconductor unit is hemmoraging money.

Analysts see its semiconductor business â" typically Samsung's cash cow â" reporting a more than 3 trillion won ($2.2 billion) loss for the third quarter./blockquote

DRAM and NAND manufacturing is a black hole for money right now. Everyone has cut back production and is still having to sell it for less than it's worth. That's not just bad for business, but i

Re:

[Rei]

If memory is dirt cheap right now, then it'd sure damned well be nice if NVidia started putting out consumer cards with more than 24GB of VRAM :

...and China isn't fully online yet

[EreIamJH]

China's semiconductor self-sufficiency project is only four years old, and will increase each year until the goal of 100% domestically owned IP and leading-edge mass production is reached in 2030 (currently rumoured to be ahead of schedule by a couple of years). At the same time the west is pouring billions in to domestic production, some of which will begin coming online over the next few years.

With all that non-market investment, it won't be long before the global semi-conductor market is super-saturated, leading to a profit drought and a consequent private investment drought. The only way that plays out is that companies exit the market, countries write off the industry or taxpayers becomes the major investor. Guess which one will happen...