Today, Samsung Electronics submitted a preliminary report on the third quarter of 2022, where it was reported that the decline in profits would be even greater than previously projected. It is expected that the quarterly operating surplus will drop by 32% by the year due to the economic downturn that led to a drop in demand for electronic devices and memory chips.
According to Reuters, the supply of Samsung memory chips appears to have fallen below even the already low expectations, and the prices of the corresponding chips in the current quarter may fall even further, as a result of buyers' reactions to rising inflation, rising interest rates on loans and events in Ukraine.
As one of the largest producers of memory chips, smartphones, and televisions in the world, Samsung nevertheless expects that profits in the third quarter will fall to $7.67 billion — the first decline in almost three years, with $11.3 billion a year earlier.
It is known that smartphone and computer manufacturers are now delaying new purchases and using existing memory chip stocks, reducing global supply volumes and causing a decline in industry, while DRAM and NAND manufacturers are already considering incomplete capacity loading as a means of controlling overproduction. Experts predict that memory prices will also fall in this quarter, leading to a further decline in Samsung's profits in four. It is likely that demand will not recover until next year.
It is known that the competing Micron Technology has already become the first chip manufacturer to review the investment plans for the following year in a smaller way, and SK hynix also hinted at a possible reduction in investment. On Thursday, AMD presented an estimate of revenue in the third quarter, which was a billion dollars lower than projected due to weak demand for PCs.
According to Samsung, while the company is not discussing the decline in chip production, investors are waiting for a final financial report on October 27, and it is known that the company's shares have fallen by about 30% since the beginning of the year.
Counterpoint Research estimates that the supply of Samsung smartphones in the third quarter was about 66 million copies, 5% less than in the same period last year, despite the arrival of new flagships in the quarter.
Analysts believe that the company is too dependent on high-demand businesses, such as smartphone and memory markets, and that the proportion of long-term production contracts is too small; experts believe that the company needs them, as well as other measures, but that it will take time to achieve these objectives.
Samsung estimates that the company's quarterly revenues rose by 3% to $54 billion a year.