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Business News/ Companies / News/  Samsung Q3 profit plunges 78% amid slump in memory chip demand, analyst says ‘better than expected’
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Samsung Q3 profit plunges 78% amid slump in memory chip demand, analyst says ‘better than expected’

Samsung Electronics' quarterly profits has dropped nearly 78 percent owing to a slump in the prices of memory chips. The company's sales have also dropped nearly 13 percent.

A man walks past the Samsung logo displayed on a glass door at the company's Seocho building in Seoul on October 11, 2023. Samsung Electronics said on October 11, it expected third-quarter operating profits to plunge nearly 80 percent, as the firm grapples with weak demand for memory chips. (Photo by Jung Yeon-je / AFP) (AFP)Premium
A man walks past the Samsung logo displayed on a glass door at the company's Seocho building in Seoul on October 11, 2023. Samsung Electronics said on October 11, it expected third-quarter operating profits to plunge nearly 80 percent, as the firm grapples with weak demand for memory chips. (Photo by Jung Yeon-je / AFP) (AFP)

Samsung Electronics on Wednesday said that its quarterly profit had dropped 78 percent amidst a slump in the memory chips market. Samsung Electronics' operating profits have dropped to around 2.4 trillion won ($1.8 billion) in the July-September quarter compared to 10.85 trillion won a year earlier. 

Meanwhile, Samsung Electronics' sales dropped 12.7 percent during the September quarter to 67 trillion won. The South Korean giant has reported losses of around 4.58 trillion owing to memory chip prices going down and inventory values getting slashed, reported Reuters.

Samsung, the world's biggest memory chips maker, along with rivals like Micron Technology and SK Hynix has been grappling with a downturn in the memory chips market leading the company to

What analysts said on Samung Elecronics quarterly profit: 

Lee Seung-Woo, an analyst at Eugene Investment & Securities was quoted by Bloomberg as saying, “The result was better than expected…The bottom for the memory chip industry is behind us and Samsung’s results showed that."

Ko Yeongmin, an analyst at Daol Investment & Securities told Reuters, "It's better than expected. Although the situation is not great in the chip business... the decline in memory prices is easing, and further drops will be limited,"

Why is Samsung Electronics facing issues with memory chips? 

Samsung Electronics, the world's largest smartphone maker, is a subsidiary of the Samsung Group, which dominates South Korea's economy. The company has enjoyed record profits in recent years as the prices of its products have risen. However, the global economic slowdown has dealt a severe blow to its memory chip sales, reported AFP. 

Demand for memory chips had risen during the pandemic as consumers rushed to buy new smartphones and other electronic gadgets during the lockdown, pushing chipmakers to ramp up production. However, once the lockdown was lifted, consumer sales fell in the wake of spiralling inflation and rising interest rates.

 

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Published: 11 Oct 2023, 08:48 AM IST
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