Samsung’s profit expected to hit a 14-year low due to ongoing chip oversupply.

Breaking News: Samsung’s Profit Plunges 96% in Q2

By Joyce Lee

In a shocking turn of events, Samsung Electronics is expected to see a staggering 96% drop in profit for the June quarter. This would mark the lowest profit the company has experienced in over 14 years. Despite efforts to cut supply, the chip glut continues to wreak havoc on Samsung’s cash cow business, resulting in significant losses.

According to a Refinitiv SmartEstimate from 27 analysts, Samsung’s operating profit is projected to fall to 555 billion won ($427 million) in the April-June quarter. This would be the lowest profit the company has seen since the fourth quarter of 2008. In comparison, Samsung reported an operating profit of 14.1 trillion won in the same quarter last year.

The decline in profit can be attributed to the chip division, which has traditionally been Samsung’s biggest earner. The division is expected to report losses of around 3 trillion to 4 trillion won due to falling memory chip prices and slashed inventory values.

DRAM memory chip prices, widely used in smartphones, PCs, and servers, have continued to slide, dropping approximately 13% to 18% in the quarter. This decline has been fueled by chip buyers refraining from purchasing new chips and depleting existing inventories.

However, there is some hope on the horizon. The price decline has slowed down as Samsung Electronics and other memory chip peers have cut supply. Analysts predict that the chip market will hit bottom around the third quarter, with a substantial recovery expected in 2024.

Despite the current downturn, Samsung is actively working to increase its share of chip demand in the field of artificial intelligence (AI). The company is exploring opportunities in high bandwidth memory (HBM) and chip contract manufacturing.

In terms of its mobile business, Samsung is expected to report an operating profit of around 3.3 trillion won. This is attributed to cost-cutting measures that have offset a slight drop in smartphone shipments. The company is also set to unveil its latest foldable smartphones earlier than usual, aiming to dominate the premium phone market before Apple releases its next iPhone.

Stay tuned for more updates on Samsung’s financial performance.

($1 = 1,298.7800 won)

(Reporting by Joyce Lee; Editing by Sonali Paul)

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