Photo source: SEONGJOON CHO/BLOOMBERG NEWS、
Samsung Electronics Co. 005930.SE profit fell as the price of memory chips, the company's main source of profit, tumbled as the semiconductor industry slumped.
The South Korean tech giant reported a 23.6% drop in third-quarter net profit from a year earlier on Thursday, on weak demand for tech products such as PCs and smartphones. Tech giants such as Google parent Alphabet Inc. (GOOGL), Microsoft Corp. MSFT and Facebook parent Meta Platforms Inc. (META) also reported poor results this week.
In the July-September quarter, Samsung Electronics posted a net profit of 9.39 trillion won ($6.7 billion). Revenue for the quarter rose 3.8 percent from a year earlier to 76.78 trillion won.
PHOTO CREDIT: CAITLIN OCHS FOR THE WALL STREET JOURNAL
The semiconductor industry, which had experienced rapid growth during the previous COVID-19 pandemic, is now facing a sudden drop in demand. Memory chips, which are Samsung Electronics' cash cow business, have suffered from oversupply, triggering price declines. The South Korean company is also facing new U.S. restrictions on chip-making equipment exports to China, which are expected to affect the company's operations at its Chinese factories.
Samsung Electronics is the largest producer of two main types of memory chips, DRAM and NAND flash. DRAM enables devices to multitask, and NAND flash provides storage capability. Average contract prices for DRAM and NAND flash recorded a double-digit percentage decline in the third quarter and are expected to fall further in the coming months, according to a forecast by Taiwan's TrendForce.
Samsung Electronics reported third-quarter operating profit at its memory-heavy semiconductor business fell 49% from a year earlier to 5.12 trillion won. Revenue for the quarter fell 12.8% from a year earlier to 23.02 trillion won.
A day earlier, SK Hynix Inc. (000660.SE), the world's second-largest by memory revenue, reported a 67% drop in net profit for the July-September period and said investment in 2023 would be more than 50% lower than this year.
Samsung Electronics' third-quarter operating profit for its mobile and network business was 3.24 trillion won, down 3.6 percent from a year earlier. Third-quarter operating profit at the South Korean tech giant's TV and digital products business fell 67% from a year earlier to 250 billion won.
