By Hyunjoo Jin
SEOUL (Reuters) – Samsung Electronics Co is expected to report a more than four-fold jump in quarterly profit on Tuesday thanks to improved demand for chips, but the pace of its recovery is weakening as it is slow to capitalize on the chips. Artificial intelligence boom.
Operating profit for Samsung, the world’s largest maker of memory chips, smartphones and TVs, is likely to reach 10.33 trillion won ($7.67 billion) in the quarter ending September 30, according to an average of 29 analysts at LSEG SmartEstimate, weighted to those with more… Consistently accurate.
This represented a jump from 2.43 trillion won a year earlier, but was little changed from the 10.44 trillion won reported in the previous quarter.
The global semiconductor market is recovering from last year’s decline, driven by chips used in artificial intelligence servers, but the recovery in demand for traditional chips used in smartphones and personal computers is slowing, analysts said.
The South Korean company is scrambling to catch up with smaller rivals SK Hynix and Micron (NASDAQ:) in a race to supply Nvidia (NASDAQ:) with cutting-edge AI chips, while facing increasing competition from Chinese rivals for commodity chips.
Samsung’s bread-and-butter chip division is expected to turn an operating profit of 5.5 trillion won from a year earlier, but this will fall 15% from the previous quarter, also affected by Samsung’s allocation of bonuses, according to estimates. From 10 analysts compiled by Reuters.
Analysts say Samsung’s late response to the high-margin AI chip market and its greater exposure to China and traditional mobile chips than its peers have made it more vulnerable to geopolitical risks and lackluster demand.
“Samsung will likely lose the No. 1 DRAM vendor title if the commodity DRAM market weakens,” Daniel Kim, an analyst at Macquarie Equity Research, said in a recent note, referring to DRAM chips. . Widely used in computers and smartphones.
“This means that an oversupply of traditional DRAM is likely to hurt Samsung much more than SK Hynix.”
These pessimistic forecasts come as Micron last month forecast first-quarter results ahead of Wall Street estimates and posted its highest quarterly revenue in more than a decade on the back of growing demand for memory chips used in the artificial intelligence industry.
Analysts estimate that Samsung’s non-memory chip operations – chip design and contract manufacturing – also continued to post a loss in the third quarter, as it struggled to compete with dominant leader TSMC, which counts Apple (NASDAQ:) and Nvidia among its businesses. Clients.
Reuters reported in September that Samsung had decided to cut up to 30% of its overseas employees in some departments, highlighting the challenges the company faces.
Analysts said sales of premium foldable phones are likely to be disappointing, affecting the company’s profits, which faces increasing competition from Chinese rivals such as Huawei. Mobile phone and network companies posted operating profits of 2.6 trillion won in the third quarter, down by a fifth from a year earlier, according to estimates from 10 analysts compiled by Reuters.
Samsung Electronics shares are down 23% so far this year, lagging SK Hynix’s 23% rise.
The South Korean company will announce its preliminary third-quarter earnings on Tuesday before announcing full numbers later this month.
($1 = 1,336.3900 won)
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