Samsung flags 56% decline in operating profit in Q3


The company believes that it will post an operating profit of around 7.7 trillion Korean won ($6.44 billion). Samsung's chip business has been its biggest moneymaker in a while, so the lack of demand for memory chips worldwide is hurting the company finances.

Samsung Electronics said on Tuesday it expected operating profits to drop more than 50 percent in the third quarter as it struggles with a long-running slump in the global chip market.

A simmering dispute between South Korea and Japan, which has seen Tokyo impose restrictions on chemical exports crucial to the South's world-leading chip and smartphone companies - is also expected to affect Samsung Electronics' key products.

Operating income was 7.7 trillion won ($6.4 billion) in the three months ended September, compared with the 6.97 trillion won analysts had forecast, according to estimates compiled by Bloomberg.

Sales for the third quarter were 62 trillion won, beating the average projection of 61.14 trillion won compiled by Bloomberg.

More news: Julian Castro escorts group of asylum seekers from Mexico to Texas
More news: Instagram's Following Activity Tab Is Disappearing This Week
More news: Fortnite has the same effect as cocaine on kids’ brains, lawsuit says

The tech giant will reveal more details about the state of the company when it releases its full earnings report.

But since the end of previous year, demand and prices for flash memory have taken a steep nosedive because of an oversupply that has dragged on Samsung's profitability. "The base effect also affected the division's earnings as its second-quarter earnings were abysmal".

Samsung appealed to high-end users with the launch of its first foldable smartphone last month after faulty screens forced an embarrassing delay in April. This is basically due to the decline in global memory chip prices.

Sales of Huawei's Honor smartphones, which are mainly in the $180-$249 price band and accounted for a large portion of sales outside of China, had dropped significantly since March, allowing Samsung to boost sales volumes of its new A series, according to Counterpoint.

Analysts credit Samsung with receiving a boost from US sanctions on Huawei that effectively bar USA firms from supplying the Chinese competitor. "The strong smartphone sales has limited ability to fix all Samsung's issues", said Park Sung-soon, an analyst at Cape Investment & Securities. It held a 20 percent market share back in 2013, but saw that dominance plummet to just 1% in 2018.