Samsung Profit Sinks 32% as Memory Chip Downturn Worsens
Samsung Electronics Co. reported its first profit drop since 2019, underscoring the depth of a global PC and memory chip downturn.
Operating profit fell by 32% to 10.8 trillion won ($7.7 billion) for the three months ended September, South Korea's largest company said Friday in a statement. Analysts had estimated 12.1 trillion won on average. Sales also missed estimates, coming in at 76 trillion won. Samsung will provide net income and details of divisional performance with its full report at the end of this month.
Global memory chipmakers warned in recent weeks that they are facing a tougher market as inventories build up and orders are being cut by data center as well as consumer tech clients after demand for PCs and smartphones weakened further than expected. Micron Technology Inc. and Kioxia Holdings Corp. are cutting output to try and rebalance supply and avert a price crash.
Shortly before Samsung's results, US processor and graphics chip maker Advanced Micro Devices Inc. also missed estimates with its third-quarter sales figures, which came in $1 billion shy of its own forecast. “Macroeconomic conditions drove lower than expected PC demand and a significant inventory correction,” AMD Chief Executive Officer Lisa Su said.
Samsung shares fell by as much as 2% in Seoul on Friday after the news.
“This downcycle is not merely driven by typical supply and demand dynamics, it's different from the past cycles due to geopolitical risks,” said Heo Pil-Seok, chief executive officer at Midas International Asset Management in Seoul. “The US government's exports controls would further limit IT companies' sales in China and a large chunk of demand for chips will be weakened. If AMD, Nvidia can't sell their chips in China,
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