By Hyunjoo Jin
SEOUL (Reuters) – Samsung Electronics (KS:) is predicted to flag greater than a four-fold leap in quarterly revenue on Tuesday on enhancing demand for chips, however the tempo of its restoration is weakening, as it’s gradual to money in on the substitute intelligence growth.
Working revenue for Samsung, the world’s high maker of reminiscence chips, smartphones and TVs, probably stood at 10.33 trillion gained ($7.67 billion) within the quarter ended Sept 30, in line with a median from 29 analysts with LSEG SmartEstimate, weighted towards those that are extra persistently correct.
It is a leap from 2.43 trillion gained a yr earlier, however little modified from 10.44 trillion gained reported within the earlier quarter.
The worldwide semiconductor market has been recovering from a downturn final yr, pushed by chips utilized in AI servers, however demand restoration for typical chips utilized in smartphones and PCs is slowing, analysts mentioned.
The South Korean firm has been scrambling to meet up with smaller rivals SK Hynix and Micron (NASDAQ:) in a race to provide high-end AI chips to Nvidia (NASDAQ:), whereas dealing with rising competitors from Chinese language rivals for commodity chips.
Samsung’s bread-and-butter chip division is predicted to swing to an working revenue of 5.5 trillion gained from a yr earlier, however this shall be down 15% from the previous quarter, additionally damage by Samsung setting apart provisions for bonuses, in line with estimates from 10 analysts compiled by Reuters.
Samsung’s late response to the higher-margin AI chip market and its increased publicity to China and conventional cellular chips than its friends have made it extra susceptible to geopolitical dangers and lackluster demand, analysts say.
“Samsung is more likely to lose the title of number 1 DRAM vendor in case of a softer commodity DRAM market,” Daniel Kim, an analyst at Macquarie Fairness Analysis mentioned in a latest word, referring to dynamic random entry reminiscence (DRAM) chips which are extensively utilized in computer systems and smartphones.
“That is, the conventional DRAM supply glut will likely hurt Samsung far more than SK Hynix.”
The downbeat forecast comes as Micron final month forecast first-quarter outcomes forward of Wall Avenue estimates and reported the best quarterly income in additional than a decade on the again of booming demand for its reminiscence chips used within the AI trade.
Analysts estimated that Samsung’s non-memory chip operation – chip designing and contract manufacturing enterprise – additionally continued to make a loss within the third quarter, as it’s struggling to compete with dominant chief TSMC, which counts Apple (NASDAQ:) and Nvidia amongst its clients.
Samsung is reducing as much as 30% of its abroad employees at some divisions, Reuters reported in September, underlining challenges for the corporate.
Gross sales of premium foldable telephones are additionally more likely to disappoint, weighing on the revenue of the corporate which faces rising competitors from Chinese language rivals like Huawei, analysts mentioned. Its cell phone and community companies posted an working revenue of two.6 trillion gained within the third quarter, down by one-fifth from a yr earlier, in line with estimates by 10 analysts compiled by Reuters.
Samsung Electronics shares fell 23% thus far this yr, lagging SK Hynix’s 23% rise.
The South Korean agency will announce its preliminary third-quarter earnings on Tuesday earlier than reporting full figures later this month.
($1 = 1,336.3900 gained)
