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Samsung announces Q4 2018 earning guidance, operating profit down 29%

Samsung recorded its highest ever profits last quarter, but three months on things aren’t looking so great. The company just announced its earnings guidance for Q4 2018 with an estimated 29 percent drop in profit. Weak demand in the memory division caused the profits to decrease sharply, Samsung said.

In a regulatory filing, Samsung estimated sales worth 59 trillion won (about $52.5 billion) during Q3 2018. This is down 9.87 percent from 65.46 trillion won ($58 billion) in the previous quarter.

No improvements expected in Q1 2019

Samsung estimated profit at about 10.8 trillion won ($9.67 billion) for October-December last year, down 29 percent from the same period a year earlier. This is Samsung’s lowest profit since Q1 of 2017. And the company expects the profits to remain subdued in the first quarter of 2019 as well, owing to weak seasonality in the memory market.

The market is likely to improve in the second half of the year as new smartphones release. Samsung may be pointing to its 5G and foldable devices to improve its mobile division’s performance. The company’s OLED panels for smartphones will also continue to increase market penetration. Analysts, however, expect Samsung’s profit to decline through 2019 as a slowing Chinese economy erodes demand for its chips and handsets.

Samsung does not usually explain the details behind its estimates, but instead waits for the full earnings release. The company, however, issued a statement for earnings guidance on Tuesday to “ease confusion” among investors, who are already on the edge. The forecast is based on estimates made under K-IFRS. The estimated data don’t include the performances of respective business divisions. The finalized earnings report for Q4 2018 is expected to be announced later this month.

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Biransahin
Biransahin

It’s kind of ironic but it may well have been Apples new iPhones failing that caused the drop in profits from the memory division.

locarno
locarno

But Apple don’t use TSMC chips ?

Biransahin
Biransahin

Partly correct. TSMC is indeed supplying the A series chips for Apple, have been for a couple of years now, but the nand flash memory comes from Samsung. It’s the memory division that lost some profits, the SoC is a different component.