# Samsung profit likely lowest in more than 14 years as chip glut persists
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-07-06
Category: Uncategorized
Category URL: https://financedigest.com/category/uncategorized
Meta Title: Samsung Profit Plunges 96% in Chip Glut
Meta Description: Samsung's June-quarter profit expected to drop by 96% to 555 billion won, its lowest in over 14 years due to chip oversupply driving losses.
URL: https://financedigest.com/samsung-profit-likely-lowest-in-more-than-14-years-as-chip-glut-persistshtml

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# Samsung profit likely lowest in more than 14 years as chip glut persists

By Joyce Lee

SEOUL (Reuters) -Samsung Electronics’ June-quarter profit is expected to plunge 96% on-year to the lowest for any quarter in more than 14 years, as a chip glut continues to drive large losses in the tech giant’s cash cow business despite a supply cut.

Operating profit for the world’s biggest maker of memory chips, smartphones and TVs likely fell to 555 billion won ($427 million) in the April-June quarter, according to a Refinitiv SmartEstimate from 27 analysts, weighted toward those who are more consistently accurate.

If so, it would be Samsung’s [lowest profit since](https://www.financedigest.com/britains-cost-of-living-crisis-sends-sterling-to-lowest-since-mid-july.html "Britain’s cost of living crisis sends sterling to lowest since mid-July") the fourth quarter of 2008, when Samsung Electronics reported a consolidated operating loss of about 740 billion won. It compares with an operating [profit](https://www.financedigest.com/taylor-wimpey-expects-full-year-profits-to-halve-amid-housing-gloom.html "Taylor Wimpey expects full-year profits to halve amid housing gloom") of 14.1 trillion won in the April-June quarter last year.

This is because its chip division, traditionally its biggest earner, likely reported quarterly losses of around 3 trillion to 4 trillion won as [memory chip](https://www.financedigest.com/u-s-considers-crackdown-on-memory-chip-makers-in-china.html "U.S. considers crackdown on memory chip makers in China") prices fell further and its inventory values were slashed.

Prices of DRAM memory chips – widely used in smartphones, PCs and servers – continued to slide in the quarter, [falling about 13% to 18%](https://www.financedigest.com/energy-costs-for-most-british-households-to-fall-18-from-july-cornwall-insight.html "Energy costs for most British households to fall 18% from July -Cornwall Insight") according to TrendForce, as chip buyers refrained from purchasing new chips and used up inventories.

However, the price decline slowed from previous quarters as [Samsung Electronics and memory chip](https://www.financedigest.com/britains-ocado-follows-rivals-in-cutting-some-prices.html "Britain’s Ocado follows rivals in cutting some prices") peers cut supply, and is expected to hit bottom around the third quarter, although a substantial recovery might not come until 2024, analysts said.

Despite the current downturn, Samsung is working to increase its share of chip demand from the exploding field of [artificial intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "artificial intelligence") (AI), such as with high bandwidth memory (HBM) and chip contract manufacturing, they said.

Its mobile business likely reported an operating profit of around 3.3 trillion won, according to an average of forecasts from five analysts, as efforts to cut [marketing costs](https://www.financedigest.com/complaints-from-cost-centre-to-marketing-discipline.html "Complaints: From Cost-centre to Marketing Discipline") offset a slight drop in smartphone shipments versus the first quarter, when Samsung launched its latest flagship model.

Samsung is expected to unveil its latest foldable smartphones later this month in Seoul, weeks earlier than usual, seen by analysts as a bid to dominate the premium phone market for longer before rival [Apple releases its next iPhone](https://www.financedigest.com/apple-heads-for-largest-q3-revenue-drop-since-2016-as-iphone-sales-slow.html "Apple heads for largest Q3 revenue drop since 2016 as iPhone sales slow").

The tech giant will announce its preliminary second-quarter earnings results on Friday, before reporting [full earnings](https://www.financedigest.com/flutters-full-year-earnings-turnaround-forecast-sends-shares-higher.html "Flutter’s full-year earnings turnaround forecast sends shares higher") later this month.

($1 = 1,298.7800 won)

(Reporting by Joyce Lee; Editing by Sonali Paul)


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