Samsung's earnings plunge on big drop-off in chip demand
Samsung is the latest tech company seeing a slowdown in demand joining Micron Technology and AMD
Samsung Electronics reported a worse-than-expected 32% drop in quarterly operating earnings on Friday.
The company says an economic downturn slashed demand for electronic devices and the memory chips that go in them.
Samsung's memory chip shipments likely came in below already downgraded expectations and prices could fall further this quarter.
Analysts say customers are reacting to rising inflation, higher interest rates and the impact of Russia's invasion of Ukraine.
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A view of the Samsung logo. (Jeremy Moeller/Getty Images / Getty Images)
Samsung is seen as bellwether for global consumer demand and its disappointing preliminary results add to a flurry of earnings downgrades and gloomy forecasts.
Estimated profit fell to $7.67 billion in July-September - the first year-on-year decline in nearly three years.
Samsung Electronics shows its memory chips. (Samsung newsroom)
The result was 8.5% below the estimate from Refinitiv.
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Analysts expect memory chip prices to continue to plunge in the current quarter, causing a further dip in Samsung's fourth-quarter profits.
Demand is not expected to recover until early next year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| MU | MICRON TECHNOLOGY INC. | 97.15 | -0.36 | -0.37% |
| AMD | ADVANCED MICRO DEVICES INC. | 138.93 | +4.03 | +2.99% |
Rival Micron Technology last week became the first memory-chip maker to officially cut its investment plans for next year.
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Chipmaker Advanced Micro Devices on Thursday provided third-quarter revenue estimates that were about a billion dollars less than previously forecast on weak PC demand, signaling the chip slump could be much worse than expected.
Reuters contributed to this report.