Samsung predicts profit decline as chip market swoons

The logo of Samsung Electronics is seen at its office building in Seoul South Korea

According to industry analysts speaking with The Korea Herald, Samsung is actually doing remarkably well considering how poor the demand is for chips universally.

Samsung Electronics, South Korea's tech behemoth, posted the better-than-expected third-quarter operating profit, a regulatory filing showed Tuesday.

That sounds pretty bad, and it's certainly not good no matter how you look at the situation, but the company can find a little solace in the fact this Q3 2019 total of approximately 7.7 trillion Korean won ($6.4 billion) represents a small improvement from the KRW 6.6 trillion reported for the year's second quarter.

The operating profit was estimated at 7.7 trillion won ($6.4 billion) in the July-September period, according to its earnings guidance.

They also expect that revenue has likely fell 5.3% to 62 trillion won from 65.5 trillion won a year ago. However, the full numbers will be released later this month.

However, despite an increase in DRAM shipments, the earnings of Samsung's flagship semiconductor division are expected to be about 3.3 trillion won - the same as the second quarter, as DRAM prices keep falling, Kim said.

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A weak global economy and slower spending by key data centre customers has ended a two-year boom in the broader memory chip market, where Samsung rakes in around two thirds of its entire profit.

Strong sales of Samsung Electronics' Galaxy Note 10 smartphone series are limiting forecast profit falls at the South Korean tech giant, raising hopes it is getting back on a growth track after years of moribund sales.

"The Note device is usually released in August or September and sells well until December, so I expect the demand to continue until the fourth quarter", said Tom Kang, research director at Counterpoint Research.

"The weakness and price declines in the memory chip market persisted. despite a limited recovery in demand", it said in a statement. Samsung is also the world's largest smartphone maker. However, this is still slightly better than the expectation of analysts.

"The company has reduced its inventory levels significantly, but it could take a little more time", an official said.

Shares in Samsung were up about 1 per cent versus the almost flat wider market's.KS11 as of 0245GMT.

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