The Samsung logo is on display at their pavilion during the Mobile World Congress in Barcelona, Spain, on February 28, 2024. (Photo by Joan Cros/NurPhoto via Getty Images)
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South Korean tech giant Samsung Electronics said it expects worse-than-expected profit for the third quarter.
In guidance released Tuesday, the world’s top memory chip maker said operating profit for the quarter ending September is projected to be around 9.10 trillion wonmarking a 274% surge from last year’s 2.43 trillion Korean won. However, the figure missed LSEG expectations.
Analysts polled by LSEG projected an operating profit of 11.456 trillion Korean won ($7.7 billion) for the quarter ended Sept. 30. Samsung’s revenue for the quarter was expected to hit 81.96 trillion won ($61 billion), according to LSEG estimates.
Samsung Vice Chairman, Jun Young-hyun, who is the new head of the company’s Device Solutions Division, also issued a rare apology following the release.
Performance of Samsung’s memory business decreased as a result of “one-time costs and negative effects,” which includes inventory adjustments by mobile customers and increased supply of legacy products by Chinese memory companies,” Samsung wrote in a statement.
Samsung is the leading manufacturer of memory chips, which are utilized in devices like laptops and servers. It is also the world’s second largest player in the smartphone market.
Shipments of high-bandwidth memory “HBM3E” chips to major customers were also delayed, the company added.
“Well, let’s look at the number — very disappointing,” said Daniel Yoo, head of global asset allocation at Yuanta Securities Korea. He also noted that demand for legacy chips used in PCs and smartphones, which Samsung relies on, are not picking up around the globe.
“Samsung is not taking that market share as aggressively as we have seen in the past. That is the big problem that I think we’re seeing,” Yoo added.
“The company needs to remain flexible about its memory supply control, since the downfall of conventional DRAM will likely hurt Samsung more than its smaller rivals,” Macquarie Equity Research analysts said in a recent note. DRAM refers to dynamic random access memory chips that are often used in laptops, workstations and PCs.
Samsung had instructed its subsidiaries around the world to reduce 30% of staff in some divisions, Reuters reported in September, citing two sources with knowledge of the matter.
Shares of Samsung Electronics listed in South Korea’s stock exchange have seen a 22% decrease year-to-date, LSEG data showed. The company is set to release detailed third-quarter results later this month.
Samsung’s shares slipped 0.98% following the release of the guidance.