Samsung Electronics Co.’s guidance for Q3 shows that things haven’t improved for the Korean tech giant in the last few months. The company is expecting another drop in profit for the quarter that ended in September.
Samsung expects a 56% drop in profit
The Korean conglomerate has warned investors that profit could fall 56% in Q3 as the company grapples with softening memory chips demand. On Tuesday, the company indicated that it expects an operating profit of around $6.44 billion for the quarter ended better than Q2 operating profit of $5.5 billion. This will be a decline of around $14.7 billion from the same period last year but better than analysts’ estimates.
If the estimate is correct, then it will be the third consecutive quarter that the company is halving its operating profit from 2018. Before the first quarter of this year, the company released a warning to investors before issuing the earnings guidance to prepare them as early as possible.
The company has struggled in the past year as it continues to deal with declining demand for memory chips. Samsung has indicated that it now expects a 5% drop in sales to $52 billion. Memory chips have been the company’s largest segment in terms of revenue for quite some time now.
Memory chip demand is slowly picking up
However, Daiwa Capital Markets analyst SK Kim indicated that there would be a boost in memory chip demand. This is because of the advances the company has made in extreme ultraviolet lithography, which is a major development in the manufacture of chips.
Last week analysts, Daishin Sevcurioties, indicated that Samsung’s display and memory chip business had shown growth signs because of the flagship devices from Huawei and Apple (NASDAQ:AAPL).
The company’s leading phone Galaxy Note 10 will most likely create a positive effect on its mobile business. This is because of a favorable competitive landscape, according to Daiwa analysts. Recently the company benefited from woes facing Huawei, the largest telecom equipment manufactures and second smartphone seller.