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Samsung Electronics’ June-Quarter Profit Plunges 96%, Hitting a 14-Year Low Amid Chip Glut

Samsung Electronics, the world’s leading manufacturer of memory chips, smartphones, and TVs, is anticipating a sharp decline in its June-quarter profit. Analysts project that the operating profit for the tech giant will plummet by 96% compared to the previous year, reaching its lowest point in over 14 years. This downward spiral in earnings persists despite efforts to curtail the company’s cash cow business and mitigate losses caused by a chip glut.

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Samsung Electronics’ June-Quarter Profit Plunges 96%

Based on a Refinitiv SmartEstimate provided by 27 analysts, the operating profit for the April-June quarter is expected to amount to 555 billion won ($427 million). Analysts considered the track record of accuracy among these professionals to weigh their projections.

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If the forecasts hold true, it would mark Samsung’s most meager profit since the fourth quarter of 2008. During that period, the company reported a consolidated operating loss of approximately 740 billion won. This stands in stark contrast to the operating profit of 14.1 trillion won recorded in the same quarter last year.

Samsung’s chip division, historically its primary revenue generator, is anticipated to report quarterly losses ranging from 3 trillion to 4 trillion won. These losses stem from the ongoing decline in memory chip prices and significant reductions in inventory values.

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Despite the prevailing downturn, Samsung is actively pursuing strategies to capture a larger share of the chip demand arising from the burgeoning field of artificial intelligence (AI). The company aims to achieve this through initiatives like high bandwidth memory (HBM) and chip contract manufacturing.

In terms of the mobile business, analysts predict an operating profit of approximately 3.3 trillion won. This estimate is based on the average forecast from five analysts, who believe that cost-cutting measures will offset a slight decline in smartphone shipments compared to the first quarter. Samsung recently unveiled its latest flagship model, which contributed to the slight drop in shipments.

In a move seen as an attempt to extend its dominance in the premium phone market, Samsung is scheduled to reveal its latest foldable smartphones in Seoul earlier than usual, later this month. By doing so, the company aims to gain a competitive advantage over its rival, Apple before the release of the next iPhone.

Samsung plans to announce its preliminary second-quarter earnings results on Friday, with a comprehensive report on its earnings scheduled for later this month.