Technology giant Samsung Electronics has released limited data over its third-quarter figures, which seem to suggest that their earnings for the period are down 56%. Despite a large projected reduction, the figures are still better than the forecasts by key analysts.
Memory Chip Prices
The South Korean company is said to be struggling as a result of a downturn in global memory chip prices, which have been heading down since late last year and this is now being represented in their revenue numbers.
The operating profit for the period was guessed to be $6.4 billion from the July-September period, but that was still higher than many expected to be the case. This is down from the record 17.6 trillion krw that the biggest semiconductor firm in the world triggered a year ago.
Samsung, also the largest maker of smartphones across the globe, say they expect overall sales to have dropped by 5.3% in the three-month period to 62 trillion krw, with demand for appliances such as smartphones and popular electronic gadgets seeing a drastic slowing.
Supply Glut
Those who analyse the market have suggested that a glut in the supply of flash chips, such as DRAM and NAND ones, could be a reason for the lowering of profit. These are said to account for over 60% of sales for the company, so that is a concern.
That is levelled out with the projection of improvement ahead, as prices of NAND, the chips used predominantly in mobiles, are forecast to pick up later this year, with demand expected to rise again.
It may well be that the electronics giant has bottomed out and could be set to return to its previous glories.
Trade War – Again
It is believed that the biggest determining factor in the slump is the ongoing US-China trade war, which has hit sales to clients in Asia, not least Huawei.
However, with talks set to continue regarding a possible solution, there could be light at the end of the tunnel in terms of a turnaround in the next period.
It should be acknowledged that Samsung has only released limited data ahead of regulatory filings, with the more detailed numbers due to be confirmed later in the month.