Operating profit at South Korea’s Samsung Electronics fell 96 percent in the second quarter from a year earlier to 600 billion won. The company announced its preliminary results in a press release. Despite reduced shipments, a persistent glut of chips on the market is causing significant losses in a key South Korean tech giant segment. The results are broadly in line with analysts’ estimates. Samsung is considered an indicator of consumer demand.
Refinitiv SmartEstimate had previously estimated that Samsung would report an operating profit of 555 billion won. If the preliminary data is confirmed, it will be Samsung’s lowest quarterly operating profit since the first quarter of 2009. The company will publish detailed financial results on 27 July.
Last year, the operating profit of the world’s largest memory chip and smartphone maker was 14.1 trillion won.
As recently as April-June last year, the operating profit of the world’s largest memory chip and smartphone maker was 14.1 trillion won.
The decline in operating profit for the second quarter is similar to that of the first quarter when it was 95 percent. Despite low consumer demand for technology devices, Samsung made an operating profit of 640 billion won at the time.
Samsung’s second-quarter sales fell 22 percent year-on-year to 60 trillion won.
In January-March, Samsung’s chip division posted a massive loss of 4.58 trillion won as memory chip prices continued to fall and the value of its inventory declined. However, losses in the memory chip business likely narrowed in the second quarter due to more robust sales of DRAM chips, which are used in personal computers, mobile phones, and servers, analysts said.
“After the announcement of the final results, investors will be looking for signals for the third quarter: how much of an impact the third-quarter production cut will have, any recovery in demand, and whether higher-end DRAM and high-bandwidth memory (HBM) products will improve the earnings mix,” said analyst Pak Kang-ho of Daishin Securities.
According to analysts, the decline in memory chip production that began last year will bottom out in the third quarter, although the recovery may start only slightly.
In mobile phones, Samsung is expected to unveil its latest foldable smartphones later this month in Seoul. It will be a few weeks earlier than usual, in what experts see as an effort to dominate the premium phone market for longer before rival Apple launches its next iPhone.
Source: CTK
