Samsung said on Wednesday in its preliminary earning guidance for the third quarter that it expected operating profits to fall by 77% from a year ago, as the downturn in the chip market continued.
The South Korean tech giant said it expected an operating profit of 2.4 trillion won and sales of 67 trillion won __ a 12% year-on-year drop __ for the third quarter.
The plunge in operating profit was likely caused by loss from its chip division as the supply glut affecting the semiconductor market continues amid a global economic slowdown.
But Samsung’s chip division has narrowed its loss compared to previous quarters this year by focusing on high-end memory chips and cutting production outputs, analysts said, which could indicate the start of a rebound.
The world’s largest memory chip producer posted its worst profit in 14 years in the first quarter from a 96% plunge in profits from the chip downturn. This sharp decline continued when it reported a profit drop of 95% in the second quarter.
Samsung and other chipmakers previously said they expected the chip market to start slowly recovering in the latter half of 2023.
Meanwhile, the company’s mobile business is expected to have contributed to narrowing its loss from the launch of its Galaxy Z Fold 5 and Galaxy Z Flip 5 foldable smartphones.
Samsung Display, the company’s display-making arm, is also expected to have recorded a high profit from the launch of flagship phones from its customers such as Samsung and Apple.
Samsung will announce its full earnings for the quarter at the end of the month.