Samsung claims that chip demand may rebound in late 2023 as profitability plummet

As the global economic crisis reduced demand for electronic gadgets, Samsung Electronics Co. Ltd. announced a 31% decline in third-quarter profit on Thursday and stated that geopolitical concerns are likely to stifle demand until early 2023.

The top memory chip and smartphone manufacturer in the world claimed that despite economic headwinds, demand for its semiconductors may rebound later in the next year as new data centres and computers need more memory.

Samsung's operational profit decreased year over year for the first time in almost three years, falling from 15.8 trillion won to 10.85 trillion won ($7.7 billion) for the quarter ending in July-September.

That was in line with Samsung's earlier month projection of 10.8 trillion won. Up 4% to 76.8 trillion won, revenue.

The chip business's profit decreased from 10.07 trillion won to 5.12 trillion won from the previous year.

This was noticeably more optimistic than its smaller rival SK Hynix, which on Wednesday cut expenditure by more than 50% and warned of a "exceptional downturn" in the demand for memory chips.

Despite the fact that analysts predict a further decline in Samsung's fourth-quarter profitability as a result of falling memory chip prices, analysts claimed the company will be better equipped to defend profits than its competitors due to economies of scale.

According to Daishin Securities analyst Wi Min-bok, Samsung is anticipated to maintain capital expenditure reductions in 2023 relative to 2022 at around 5% for memory chips in order to continue its transition to more advanced manufacturing, which will initially restrict supplies of some chips due to new production processes.

The plans of competitors SK Hynix or Micron Technology to potentially reduce expenditure by more than 30% next year contrast with this.