The Samsung logo was displayed at the company’s pavilion during the Mobile World Congress in Barcelona, Spain, on February 28, 2024.
Samsung Electronics, a major South Korean technology company, has conveyed that it anticipates lower-than-expected profits for the third quarter. In a guidance release on Tuesday, the world’s leading memory chip manufacturer projected operating profit for the quarter ending in September to be approximately 9.10 trillion Korean won. This represents a 274% increase from the previous year’s 2.43 trillion won, but still fell short of expectations from LSEG.
Analysts surveyed by LSEG had predicted an operating profit of 11.456 trillion won ($7.7 billion) for the quarter that concluded on September 30. Revenue was expected to reach 81.96 trillion won ($61 billion), according to LSEG’s estimates.
Samsung’s Vice Chairman, Jun Young-hyun, who also leads the Device Solutions Division, issued an uncommon apology following the company’s guidance announcement. Samsung indicated that the performance of its memory business had declined due to “one-time costs and negative effects,” including inventory adjustments by mobile customers and an increase in legacy product supply by Chinese memory companies.
Samsung stands as the top producer of memory chips, which are essential components in devices like laptops and servers, and is the second-largest vendor in the global smartphone market. The firm also mentioned that shipments of its high-bandwidth memory “HBM3E” chips to major clients experienced delays.
Daniel Yoo, head of global asset allocation at Yuanta Securities Korea, described the numbers as “very disappointing,” highlighting that global demand for legacy chips used in PCs and smartphones, critical for Samsung, remains stagnant. Yoo also expressed concern that Samsung is not gaining market share as aggressively as it has in the past, which he identified as a significant issue.
Macquarie Equity Research analysts recently suggested that Samsung needs to stay flexible with its memory supply management. The decline of conventional dynamic random access memory (DRAM) could impact Samsung more significantly than its smaller competitors. DRAM chips are commonly employed in laptops, workstations, and PCs.
In September, Samsung reportedly instructed its subsidiaries worldwide to reduce their workforce in certain divisions by up to 30%, according to Reuters, which cited two sources familiar with the situation.
Year-to-date, Samsung Electronics’ shares on South Korea’s stock exchange have decreased by 22%, as per LSEG data. The company plans to disclose detailed third-quarter results later this month. Following the guidance release, Samsung’s shares dropped by 0.98%.
