First dip in over three years, Samsung’s quarterly profit is expected to drop by 25%.

The third quarter profit for Samsung Electronics Co Ltd (005930.KS) may shrink by 25%, marking the company’s first year-over-year drop in nearly three years as the demand for electronic devices and the processors that power them is negatively impacted by the economy.

 

Inflation is increasing globally, central banks are actively raising interest rates, recession fears are intensifying, and there is constant uncertainty regarding the effects of Russia’s invasion of Ukraine. As a result, both companies and individuals have cut back on spending.

 

According to a Refinitiv SmartEstimate from 22 analysts, operating profit for Samsung, the largest memory chip and smartphone manufacturer in the world, likely decreased to 11.8 trillion won ($8.3 billion) in the July-September quarter.

 

It would mark both the lowest quarterly profit level since the first quarter of 2021 and the first profit decline since the first quarter of 2020, when the epidemic initially started. Up until this most recent quarter, the South Korean IT giant’s profits have increased significantly due to strong device demand brought on by people being obliged to stay at home.

 

An average of seven estimations revealed that the operating profit for Samsung’s chip unit likely decreased by about a third to 6.8 trillion won.

 

Samsung’s stock has decreased by about 30% this year. Samsung will release its preliminary results at around 8:40 a.m. local time on Friday (23:40 p.m. GMT on Thursday). Comparatively, the Philadelphia Semiconductor index had a 37% decline (.SOX).

 

 

Forecasts predict a 17% decline in profits for Samsung’s mobile division to 2.8 trillion won, despite the fact that the company’s pricey new foldable phones were introduced during the quarter, which increased the average selling price.

 

After distribution channels reduced orders, Kim Yang-jae, an analyst at Daol Investment & Securities, calculates that Samsung’s smartphone shipments decreased 11% in the quarter compared to the same time a year earlier to around 62.6 million devices.