Samsung Expects 35% Operating Profit Dip In Q4 Amid Semiconductor Price Recovery – Samsung Electronics Co (OTC:SSNLF)

Samsung Electronics Co Ltd, the South Korean tech giant, has forecasted a 35% decrease in its operating profit for the fourth quarter of 2023. This decline is primarily attributed to a recovery in semiconductor prices.

The company expects its operating profit for Q4 2023 to be 2.8 trillion South Korean won ($2.13 billion), which is considerably lower than the SmartEstimate of 3.7 trillion won by LSEG. This projected decline in profit is due to increased memory chip prices, which resulted from production cuts and a spike in demand for mobiles and PCs.

The COVID-19 pandemic had initially caused a dip in memory chip prices due to oversupply and weak demand for end products like smartphones and laptops. This drop severely impacted Samsung’s earnings, with their Q2 operating profit falling by 95% year-over-year. However, in late October, Samsung and SK Hynix, the world’s second-largest DRAM memory chip maker, indicated that weak demand may have reached its lowest point due to production cuts. Analysts predict further price increases in 2024 and a significant recovery in earnings for memory makers in the following years.

Despite experiencing a decline in third-quarter sales and profits, Samsung continued to invest in AI and premium products in hopes of a turnaround. The company is set to launch its next flagship smartphone, the Galaxy S24, on January 17. This new offering, which focuses on AI, could potentially be a game-changer for the tech giant’s revenue in the coming years.

The projected decline in Samsung’s operating profit for Q4 2023 highlights the impact of fluctuating semiconductor prices on the company’s earnings. However, with the expected recovery in memory chip prices and the launch of innovative products like the Galaxy S24, Samsung is poised for a potential rebound in the future.

Disclaimer: The above article is for informational purposes only and should not be considered as financial advice.

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