Samsung: demand down, Q3 profits expected to drop 25%
The economic slump may lead to Samsung experiencing a 25% decline in profits in Q3 2022 - the first drop in almost three years. The demand for electronic gadgets and chips has been on a downward trend as inflation is up, interest rates are being increased all over the world, and the ambiguity of the consequences of Russian’s war waged on Ukraine is still very much present. Both consumer and business demand are down for these reasons.
The world’s top chip and electronics manufacturer, Samsung is likely land at around $8.3 billion operating profit in Q3 after the decline.
The first decline in profit since the beginning of the coronavirus pandemic, the lowest quarterly profit in one and a half years – that’s what these disturbing results demonstrate against the background of a troubling situation in the global economy as a whole. In the preceding periods many people were still working from home, producing robust demand for a variety of devices, while this trend has been slowly but surely wrapping up.
DRAM memory chip price declined by a whopping 14%, while NAND flash chips dropped by 8%. The former are mostly used in PCs and smartphones, while the latter are needed for data storage.
Samsung’s shares have been falling, with the year-to-date loss constituting approximately 30%. Preliminary results will be announced on Friday, October 7. The company’s mobile business is also expecting to experience a hit with a minus 17% (to about $2 billion) forecast – even though the launch of the foldable models raised the average selling price this quarter.
Samsung’s smartphone shipments also dropped 11% year on year, with 62.6 million units shipped.