Samsung Electronics SSNLF has issued a warning, predicting a significant drop in third-quarter profits, due to various factors including one-time costs and a surge in supply from Chinese rivals.
What Happened: On Tuesday, the South Korean tech giant announced an estimated operating profit of approximately 9.10 trillion won ($7.6 billion) for the quarter ending in September. This represents a 274% increase from the previous year’s 2.43 trillion won.
The company’s memory business has been impacted by “one-time costs and negative effects,” which include inventory adjustments by mobile customers and an increase in the supply of legacy products by Chinese memory companies, Samsung stated.
These memory chips are used in devices such as laptops and servers, and Samsung is the leading manufacturer of these chips. The company is also the world’s second-largest player in the smartphone market.
Furthermore, the company reported that shipments of HBM3E chips to major customers were delayed. In August, it was reported that Nvidia Corp. NVDA successfully tested and approved Samsung Electronics' fifth-generation high bandwidth memory chips, known as HBM3E, for use in its artificial intelligence processors.
Price Action: Following the release of the earnings guidance, Samsung’s share price, which has already fallen by more than 24.12% year-to-date, dropped by an additional 0.7%, according to data from Benzinga Pro.
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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