Samsung electronics anticipates lower third- quarter profits amid market challenges

Suwan Si: As per reports, South Korean tech giant Samsung Electronics has announced that it expects third-quarter profits to be worse than previously anticipated. In guidance issued on Tuesday, the world's largest memory chip manufacturer projected an operating profit of approximately 9.10 trillion won ($6.7 billion) for the quarter ending September. While this represents a significant 274 percent  increase from last year's operating profit of 2.43 trillion won, it falls short of analysts' expectations.

According to analysts polled by LSEG, the consensus forecast for Samsung's operating profit was 11.456 trillion won ($7.7 billion) for the quarter ending September 30. Revenue for the same period was estimated to reach 81.96 trillion won ($61 billion).

In a rare statement, Samsung's Vice Chairman, Jun Young-hyun, who recently took over as head of the company's Device Solutions Division, issued an apology following the guidance announcement. The decline in performance within Samsung's memory business was attributed to "one-time costs and negative effects," including inventory adjustments by mobile customers and increased supply of legacy products from Chinese competitors.

As the leading manufacturer of memory chips used in devices such as laptops and servers, Samsung also ranks as the world's second-largest player in the smartphone market. The company reported delays in shipments of high-bandwidth memory (HBM3E) chips to key customers.

Analysts from Macquarie Equity Research highlighted the need for Samsung to remain adaptable regarding its memory supply management, warning that the decline of conventional DRAM chips could impact the company more severely than its smaller competitors. DRAM, or dynamic random access memory, is commonly used in laptops and PCs.

In September, reports indicated that Samsung had instructed its subsidiaries to reduce staff by 30 percent in certain divisions, according to sources familiar with the matter.

Shares of Samsung Electronics have dropped by 22 percent  year-to-date, according to LSEG data. Following the release of the profit guidance, Samsung's shares fell by 0.98%. Detailed third-quarter results are expected later this month.