Samsung's Earnings Fall Sharply, Dragged Down by Chip Slump
October 30 2019 - 9:10PM
Dow Jones News
By Eun-Young Jeong
SEOUL -- Samsung Electronics Co.'s third-quarter net profit fell
sharply, pressured by a downturn in the memory-chip market, despite
growth at its mobile and display businesses.
The South Korean tech giant reported a net profit of 6.29
trillion won ($5.4 billion) for the three months ended Sept. 30, a
52% drop from a year earlier, when the company reported its
highest-ever net profit. The company reported revenue of 62
trillion won, down 5.3%.
Samsung, the world's largest producer of memory chips, posted
record quarterly profits for much of 2017 and 2018 as global demand
for chips soared. More than 75% of Samsung's earnings came from
chips last year. But a semiconductor supply glut has dragged down
prices, ending Samsung's earnings hot streak.
The slump in profits hasn't affected the company's share price,
which has rallied more than 30% this year as of Wednesday. Some
analysts say the stock has risen in anticipation of a rebound in
chip demand next year from smartphone makers.
The amount of memory required for a smartphone will increase,
thanks to faster communication speeds and the spread of 5G-enabled
smartphones in 2020, said Kazunori Ito, an analyst at Morningstar
Inc.
But others caution that the market for chips isn't likely to
recover soon. Economic uncertainties around the U.S.-China trade
war are prompting Chinese companies like Huawei Technologies Co. to
build an inventory of chips ahead of more potential trade
restrictions, said Kim Nam-hyung, an analyst at Arete Research.
Samsung's mobile business posted an operating profit of 2.92
trillion won in the third quarter, up 32% from a year earlier. The
company's display business recorded a 6.3% increase in operating
profit to 1.17 trillion won.
Write to Eun-Young Jeong at Eun-Young.Jeong@wsj.com
(END) Dow Jones Newswires
October 30, 2019 20:55 ET (00:55 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Samsung Electronics (PK) (USOTC:SSNHZ)
Historical Stock Chart
From Mar 2024 to Apr 2024
Samsung Electronics (PK) (USOTC:SSNHZ)
Historical Stock Chart
From Apr 2023 to Apr 2024
