Samsung quarterly profit expected to be lowest in over 14 years as chip glut persists

SEOUL - Samsung Electronics’ June quarter profit is expected to plunge 96 per cent year on year to the lowest for any quarter in more than 14 years, as a chip glut continues to drive large losses in the tech giant’s cash cow business

despite a supply cut.

Operating profit for the world’s biggest maker of memory chips, smartphones and TVs likely fell to 555 billion won (S$576 million) in the April-June quarter, according to a Refinitiv SmartEstimate from 27 analysts, weighted towards those who are more consistently accurate. If so, it would be Samsung’s lowest profit since the fourth quarter of 2008, when it reported a consolidated operating loss of about 740 billion won.

It compares with an operating profit of 14.1 trillion won in the 2022 April-June quarter.

This is because its chip division, traditionally its biggest earner, likely reported quarterly losses of around three trillion to four trillion won as memory chip prices fell further and its inventory values were slashed.

Prices of Dram memory chips – widely used in smartphones, PCs and servers – continued to slide in the quarter, falling about 13 per cent to 18 per cent according to TrendForce, as chip buyers refrained from purchasing new chips and used up inventories.

But the price decline slowed from previous quarters as Samsung and memory chip peers cut supply, and is expected to hit bottom around the third quarter, although a substantial recovery might not come until 2024, analysts said. Despite the current downturn,

Samsung is working to increase its share of chip demand

from the exploding field of artificial intelligence, such as with high bandwidth memory and chip contract manufacturing, they said.

Its mobile business likely reported an operating profit of around 3.3 trillion won, according to an average of forecasts from five analysts, as efforts to cut marketing costs offset a slight drop in smartphone shipments versus the first quarter, when Samsung launched its latest flagship model.

Samsung is expected to unveil its latest foldable smartphones later in July in Seoul, weeks earlier than usual, seen by analysts as a bid to dominate the premium phone market for longer before rival Apple releases its next iPhone. REUTERS