Samsung predicts profit decline as chip market swoons

Samsung predicts profit decline as chip market swoons

Samsung predicts profit decline as chip market swoons

The chaebol is now out with its latest earnings guidance, and although the financial results for the July - September timeframe are not final yet, it looks like the tech giant's consolidated operating profit has once again declined by exactly 56 percent compared to the same quarter of past year.

In the earnings report Samsung state that operating profit will more than halve to £5.2 billion for the quarter, down from £11.9 billion in Q3 2018.

Samsung reported gross sales of round 62 trillion Korean gained (£42bn) for the three months to the end of September, down round 5pc one year on one year.

Just looking at the numbers also wouldn't tell you that Samsung is slumping in the same ways that its competitors are slumping. At the time, the company said it expected more uncertainty later in the year.

"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. On-year, operating profits were down 56 percent, while sales were down five percentmainly on lower memory chip prices.

While Samsung has been benefiting from Huawei's woes in terms of smartphone sales, its status as the world's biggest semiconductor firm by revenue also leaves it exposed to its Chinese rival's troubles.

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The current US-China trade war is seen as something that has affected this number, as Samsung has lost a bulk of its memory and other component sales due to them being for clients like Huawei.

The vice chairman agreed that memory chip prices have fallen steeply, as the company's third-quarter earnings turned out better than market expectations.

"The display business also improved as high-resolution Organic Light-Emitting Diodes (OLED) display orders from Apple for the new iPhone increased", the source added.

It tumbled 56.2 percent compared with the same quarter of past year when Samsung recorded its record operating profit, but it was up 16.7 percent from the previous quarter. Thus hurting its memory chip business is detrimental to Samsung.

Samsung did not break down the performances of its respective business divisions, saying it will announce the detailed earnings later this month.

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