Samsung’s third-quarter profit is down about 80 percent compared to last year, according to analysts. One major cause is the continued reduction in demand for chips, which is normally the South Korean tech conglomerate’s cash cow.
Reuters reports that Samsung’s quarterly profit is expected to come in at $1.56 billion in the third quarter of this year. This is 80 percent less than in the same period in 2022.
Disappointing chip sales
The main reason for the significantly disappointing quarterly profit is the continued reduction in demand for chips. The South Korean tech group’s chip production forms the basis of its earnings.
Worldwide demand for memory chips in particular remains low, as smartphone and PC manufacturers are placing fewer orders. Pre-empting a possible economic recession, these companies are now ensuring that they first use up their existing stock of chips before ordering new ones. They are not expected to place new orders until early 2024.
Global demand for memory chips for AI applications, such as in data centers, is enjoying very strong growth. Samsung is however lagging behind SK hynix in securing orders, such as with GPU giant Nvidia.
Smartphone business on the rise
Samsung’s smartphone business is however doing well, analysts note. This market segment grew in the past quarter, despite slow sales in general. Among other things, the company’s new foldable smartphones are very popular.
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