SEOUL—
Samsung Electronics Co.
is expected to see its third-quarter profits slump as the company’s mainstay memory-chip and smartphone businesses feel the effects of curbed consumer spending on tech products in the midst of high inflation and other economic pressures.
On Friday, the tech company projected third-quarter operating profit of 10.8 trillion South Korean won, or roughly the equivalent of $7.7 billion, a drop from the prior year’s 15.8 trillion won.
Revenue for the quarter ended Sept. 30 is expected to increase year over year by 2.7% to 76 trillion won, the company said.
The company’s estimated third-quarter results were well below market expectations. Analysts polled by FactSet were on average expecting roughly 11.9 trillion won in operating profit and 78.2 trillion won in revenue.
The analysts’ estimate for the quarter had once been much higher, ahead of steep drops in memory-chip prices in recent months. In June, Samsung’s operating profit for the July-September period was expected to be around 15.9 trillion won, according to FactSet.
The U.S. dollar has gained significant value against other currencies, including Samsung’s home-country currency, the won, which recently hit a 13-year low. A strong dollar can drive up the cost of purchasing materials and components used to manufacture electronic products.
Samsung is considered a bellwether for the tech world. It is a major component supplier to companies such as
Apple Inc.
and is the world’s No. 1 seller of smartphones and television sets, plus a major player in many other areas of consumer electronics.
Photos: Why Are Chips So Difficult to Make
Other semiconductor companies are facing tough conditions.
Advanced Micro Devices Inc.
on Thursday lowered its revenue forecast for the third quarter, after issuing a subdued outlook earlier. AMD said the PC market has weakened significantly in recent months.
Samsung reports full earnings later this month. The company is the world’s biggest producer of two types of memory chips: DRAM, which enables devices to multitask, and NAND flash, which provides storage on devices.
Memory chips had enjoyed a meteoric rise during the pandemic as demand for tech gadgets that power online activity surged to fuel a historic supply shortage that gave producers pricing power. Prices of memory began falling at the end of last year and continued dropping as consumer demand soured.
Write to Jiyoung Sohn at [email protected]
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