Samsung Electronics' profits will plummet as demand for driver chips drops

According to foreign media reports, South Korea's Samsung Electronics Co.'s third-quarter profit will plunge 25%, its first year-on-year decline in nearly three years, as the economic downturn weakens demand for electronic equipment and its driver chips.

 Globally, inflation is risingrising, central banks are actively raising interest rates, concerns about economic recession are growing, and uncertainty in international relations has intensified. Therefore, businesses and consumers have controlled spending.

  A survey of 22 analysts by market research firm Refinitiv SmartEstimate showed that Samsung, the world's largest manufacturer of memory chips and smartphones, may see its operating profit drop to 11.8 trillion won (approximately US$8.3 billion) in the third quarter.

   This will be the first decline in Samsung's operating profit since the outbreak, and it will also be the lowest quarterly profit level since then. Until this quarter, strong demand for devices, as many people were forced to stay at home, had given Samsung a huge profit boost.

The average forecast from seven analysts showed that operating profit of Samsung's chip business may fall by nearly a third to 6.8 trillion won (about 4.8 billion U.S. dollars).

  Data from market research firm TrendForce shows that the price of some DRAM memory chips widely used in smartphones and personal computers fell by 14% this quarter, while the price of NAND flash memory chips used for data storage fell by 8%.

Samsung will announce preliminary results on Friday local time. The company's stock price has fallen by about 30% this year. In comparison, the Philadelphia Semiconductor Index plunged 37%.

 Samsung's mobile business profits are also expected to fall sharply, possibly as much as 17% to 2.8 trillion won (about $2 billion), even as the company's new foldable smartphones launched in the quarter boosted average selling prices.

Daol Investment & Securities analyst Kim Yang-jae estimates that in theAfter sales channels cut orders, Samsung's third-quarter smartphone shipments may fall 11% from the same period last year to about 62.6 million units.

 Samsung's memory chip rival Micron last week slashed investment for next year and warned of tougher times ahead.