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Technology

Samsung likely to post 60.2% cut in Q3 operating profit

Seoul, Sep 29 

Amid slowing demand for smartphones and continuing falls in chip prices, Samsung Electronics is likely to report a 60.2 per cent plunge in its third-quarter operating profit, an industry report showed on Sunday.

According to the report by Seoul-based financial market tracker FnGuide, Samsung is expected to post 6.9 trillion won ($5.8 billion) in the third-quarter operating profit, compared with a profit of 17.5 trillion won a year ago, Yonhap news agency reported.

Compared with a previous estimate three months earlier, the latest estimate was down 8.2 per cent.

Since late last year, Samsung has been grappling with the semiconductor industry's downturn amid slowing demand for smartphones and other electronic gadgets.

Samsung has expressed hopes that prices of NAND, mostly used in mobile devices, will pick up in the third quarter, given a stabilizing inventory level and rising demand in the second quarter.

For computer memory chips, Samsung anticipated demand recovery in the third quarter as data centres resumed purchasing server DRAM in the late second quarter, but it cautioned there would be more volatility in the market in the wake of global trade tension.

Some analysts expected Samsung's third-quarter operating profit to exceed 7 trillion won as the global chip industry is projected to bottom out in the second half of this year.

Lee Seung-woo, an analyst at Eugene Investment and Securities, said shipments of both NAND and DRAM chips are expected to grow at a faster pace in the third quarter.

However, uncertainties remain over the prolonged trade war between the US and China, as well as Japan's export curbs on key chip-making materials targeting South Korea, analysts said.

In July, Samsung reported second-quarter net profit of 5.18 trillion won, down 53.1 per cent from a year earlier, due to due to weak memory chip prices and a slump in the mobile business.

Its operating profit plunged 55.6 percent on-year to 6.59 trillion won for the second quarter.