Samsung’s profit could decline due to memory chip prices

Samsung Beats Estimates as Demand Picks Up for Note IPhone

Samsung profit tumbles as memory chip business suffers from low demand

It would also be a quarter-on-quarter recovery of 16.67% - up from 6.6 trillion won in the second quarter.

For example, the expected Q3 2019 profits will be higher than what the company made in Q2 2019, which was 6.6 trillion Korean won (~$5.5 billion).

Industry sources estimated Samsung's chipmaking division's operating income at between 3.3 trillion won and 3.6 trillion won.

But since the end of a year ago, demand and prices for flash memory have taken a steep nosedive because of an oversupply that has dragged on Samsung's profitability.

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

It tumbled 56.2 percent compared with the same quarter of past year when Samsung recorded its record operating profit, but it was up 16.7 percent from the previous quarter. In preparation for that report, the company released an official forecast for investors that gives us a little bit of an idea of what to expect.

The mobile division was also expected to have logged improved results during the third quarter on the back of strong sales of its Galaxy Note 10 and its cheaper Galaxy A series, the analysts said.

Samsung has benefited from the current troubles facing Huawei, the world's largest telecommunications equipment maker and No. 2 smartphone seller. As Japan's export curbs on key materials used in chips and display production kicked in early July, clients raised their inventories of memory components to minimize risk, according to a note from TrendForce on 26 September.

"Although DRAM and NAND demand is recovering and shipments in the third quarter were quite robust, there is skepticism about the sustainability of the demand upturn", said Sanjeev Rana, technology analyst at CLSA.

However these figures have beaten some estimates, while analysts are citing encouraging metrics for the world's largest mobile phone manufacturer.

The Note 10 was released only in 5G model in the domestic market on August 23. In Q1, Samsung Electronics said its operating profit fell more than 60 percent due to sinking prices of memory chips and display panels. The earnings guidance was announced before the market opened.

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