Samsung posts 78 per cent profit fall, better than previous quarter, in sign of chip market recovery

The result, in line with analyst estimates, reflects an improvement from the record 95 per cent profit plunge in the second quarter

Samsung now seeks to position itself to benefit from an artificial intelligence-related boom in tech spending, fuelled by OpenAI’s ChatGPT

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Samsung Electronics’ headquarters in Suwon, South Korea. Photo: Reuters

Published: 9:57am, 11 Oct 2023

Samsung Electronics reported a 78 per cent plunge in quarterly profit, reflecting the severity of a sector-wide slump that continues to weigh on the world’s biggest maker of memory chips.

South Korea’s largest company has been struggling with an industry downturn alongside smaller rivals SK Hynix and Micron Technology. Mainstay customers, including makers of personal computers and smartphones, have been cutting orders to deal with weak demand for gadgets and excess inventory of chips.

Operating income dropped to about 2.4 trillion won (US$1.8 billion) on a 13 per cent drop in sales in the three months to September, according to Samsung’s preliminary results. But the numbers, in line with analyst estimates, reflects an improvement from the record 95 per cent plunge the previous quarter, bolstering shares which rose as much as 3.3 per cent in Seoul on Wednesday.

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

Samsung Electronics’ chip production plant at Pyeongtaek, South Korea. Photo: Handout via Reuters

The results come days after the US granted the company and Hynix an exemption to acquire the equipment they need to sustain and expand their chipmaking operations in China. That has lifted some uncertainty hanging over the two memory leaders, allowing them to operate in the world’s biggest chip arena and make longer-term bets.

Samsung now seeks to position itself to benefit from a long-anticipated artificial intelligence (AI)-related boom in tech spending, fuelled by investor and consumer excitement over OpenAI’s ChatGPT debut last fall.

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