Samsung’s Q3 Operating Profit Plunges 78% amid Semiconductor Industry Downturn
Samsung Electronics, the South Korean tech giant and the world’s largest manufacturer of memory chips, smartphones, and televisions, has reported a significant drop in its third-quarter operating profit. The company expects its operating profit for the July-September quarter to be 2.4 trillion won ($1.79 billion), a staggering 78% decline from the same period last year.
This disappointing performance is below market expectations and reflects the ongoing struggles in Samsung’s flagship semiconductor business. Despite some signs of recovery, the global tech-industry downturn continues to weigh heavily on the company’s once prosperous semiconductor segment.
The challenging market conditions have led to a two-quarter consecutive period of losses in the chip-making segment, which wasn’t reversed until June. In an attempt to mitigate losses and stabilize chip prices, Samsung has been cutting its overall semiconductor output, thereby reducing inventory. However, this strategy may have resulted in an increase in fixed-unit costs, which could further weaken earnings.
While Samsung’s production cuts have contributed to a gradual rebound in chip prices, the company is facing challenges in striking the right balance between meeting demand and optimizing profitability. The demand for powerful computing chips, particularly in the field of artificial intelligence, remains strong, but the overall semiconductor market remains volatile.
Samsung’s preliminary earnings forecast also predicts a 13% decline in revenue for the third quarter, reaching KRW67 trillion. These figures underline the extent of the company’s struggle in navigating the semiconductor industry’s downturn.
As Samsung prepares to release its full quarterly earnings later this month, market analysts are closely watching how the company will weather the ongoing challenges in the market. While there are hopes for continued recovery in the semiconductor industry, uncertainties remain, and Samsung will need to carefully assess its strategy to regain its position as a leading player in this highly competitive sector.
