Samsung Electronics announced its Q3 2022 preliminary earnings guidance today. The South Korean firm expects its consolidated revenue to be around KRW 76 trillion (around $) and its operating profit to be approximately KRW 10.8 trillion (around $). Although the company's revenue has increased by 2.73%, its operating profit has declined by 31.7% year-over-year.
This is the company's first profit decline over the past three years. According to analysts, Samsung's profit decline is due to a drop in demand for memory chips. Due to the current economic downturn, server clients reportedly readjusted their inventory and spending conservatively. Moreover, the prices of DRAM and NAND chips have steadily declined since the start of this year as the chip shortage problem started waning.
Low memory chip sales and prices have affected Samsung the most in Q3 2022
During the COVID-19 pandemic, consumers spent a lot on smartphones, tablets, laptops, PCs, gaming consoles, and home appliances. However, that spending decreased as businesses and schools opened. Now, the demand for TVs and other home appliances has decreased, which has affected Samsung DX. High inflation, high interest rates, and geopolitical tensions also contributed to lower sales.
Samsung MX, the smartphone division, did well with its new foldable smartphones and saw quarter-over-quarter growth. The sales of the Galaxy Z Flip 3, Galaxy Z Flip 4, Galaxy Z Fold 3, and Galaxy Z Fold 4 have been pretty good, according to various analysts, The company set a sales target of 15 million for its foldable phones, but it might fall short of that target.
Samsung's display manufacturing arm, Samsung Display, saw growth as well, thanks to impressive sales of OLED panels for Apple's iPhone 14 series. The South Korean firm's chip manufacturing business, Samsung Foundry, also saw growth in its business. System LSI, Samsung's chip design and development arm, saw lower demand as the Exynos 2200 wasn't seen in as many Galaxy S23 series as it did in previous-generation Galaxy flagship phones.
The South Korean tech giant will release its actual numbers for Q3 2022 by the end of this month, and that's when we will get some official information on the company's outlook for the next quarter and the next year.
