Samsung profit plunges in first drop since 2019 as chipmakers feel bite

Samsung is facing headwinds from a global slump in deamand and prices for its memory chips, sales of which make up a large part of the South Korean technology giant’s business.

According to the company, its operating profit likely fell 32% in the third quarter of the year.

The operating profit is expected to be between 7 and 10 trillion South Korean won. Since the beginning of the year, operating profit has declined.

A revenue increase of between 75 trillion and 77 trillion Korean won was reported by the company.

70% of its profits are from its chip business, which sells chips for laptops, server and storage.

The company sells chips for use in devices such as laptops and smartphones. Semiconductor manufacturing is one of it's businesses. Analysts said the profit fall was likely due to a decline in memory chip prices and demand, as well as a lack of commentary by the company.

In a note on Friday, Daiwa Capital Markets said that the decline in shipments and prices of memory chips resulted in a decline in earnings.

Concerns about the chip sector have been raised by the predicted profit fall.

Preliminary revenue estimates for the third quarter were below initial guidance. Significant inventory correction actions across the PC supply chain were cited by the US firm.

Last month, Micron warned that consumer demand and inventory-related challenges were affecting memory makers.

Other chip stocks were shocked by the profit fall forecast from SAMSUNG. Dutch equipment maker ASML and Apple supplierST Micro were lower in Europe.

TSMC was down in Taiwan trade. The company reported a 42.6% increase in revenue after the market closed in Taiwan. TSMC is the world's most important chipmaker and makes components for the world's largest electronics makers.

Many companies are cutting their capital expenditures and inventory in order to signal the bottom of the current Semiconductor downturn.

SK Kim, an analyst at Daiwa Securities Capital Markets, told CNBC on Friday that it was a sign of a bottom.

According to Kim, memory prices will rebound in the first half of the next year.

The shares of the company are down a lot.

The most advanced chips in five years time will be manufactured by the most advanced chip business in the world.