Connect with us

Company News

Samsung says chip demand may recover in late 2023

Samsung Electronics Co Ltd reported a 31% drop in third-quarter profit on Thursday and said geopolitical uncertainties are likely to dampen demand until early 2023, as the global economic downturn slashed appetite for electronic devices.

The world’s top maker of memory chips and smartphones said that despite the headwinds in the global economy, demand for its semiconductors may recover later next year as new data centres and computers require more memory.

This was relatively more upbeat than its smaller rival SK Hynix, which warned of an “unprecedented deterioration” in memory chip demand and slashed investment by more than 50% on Wednesday.

Samsung’s operating profit fell to 10.85 trillion won ($7.7 billion) for the July-September quarter, from 15.8 trillion won a year earlier, the first year-on-year decline in nearly three years.

That was in line with Samsung’s own estimate of 10.8 trillion won earlier this month. Revenue rose 4% to 76.8 trillion won.

Profit in its chip business fell to 5.12 trillion won from 10.07 trillion won a year earlier.

Although Samsung’s fourth-quarter earnings are expected to dip further as memory chip prices continue to fall, Samsung will be better able to defend profits than peers due to economies of scale, analysts said.

Samsung is expected to keep capital expenditure cuts to a minimum in 2023 versus 2022 – at about 5% for memory chips – to continue its migration into more advanced manufacturing, which will initially curtail supplies of certain chips due to new production process, said Daishin Securities analyst Wi Min-bok.

This differs from rivals SK Hynix or Micron Technology’s plan to potentially cut investment by more than 30% next year.

Samsung said profit in its mobile business fell slightly to 3.24 trillion won from 3.36 trillion won a year earlier, as a market downturn was offset by firmer demand for high-end smartphones and newly launched wearables.

Samsung forecast fourth-quarter demand for smartphones and wearables will increase from the previous quarter despite economic instability, as the year-end holiday season approaches. Reuters

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Copyright © 2023 Communications Today

error: Content is protected !!