Samsung Electronics Co Ltd's (005930.KS) quarterly profit will likely plunge 58% to its lowest in six years as a global economic downturn saps demand for electronic devices and clouds the outlook for the memory chip industry.
With consumers and businesses reducing spending and investment in the face of high inflation and climbing interest rates, smartphone makers and other clients held back memory chip orders, while smartphones sold for less as demand suffered, analysts said.
Samsung, as the world's biggest maker of memory chips, smartphones and TVs, is a bellwether for global consumption trends. It is expected to announce preliminary results on Friday and full results later this month.
Operating profit for Asia's fourth most valuable listed company likely fell to 5.9 trillion won ($4.62 billion) in the October-December quarter, according to a Refinitiv SmartEstimate from 21 analysts.
That would be Samsung's lowest quarterly profit since the third quarter of 2016 and compares with an operating profit of 13.87 trillion won a year earlier.
"The main reason for the performance... is a sharp drop in demand. Both shipments and prices of chips and smartphones are expected to fall short of previous expectations," said Kim Roko, analyst at Hana Financial Investment.
SmartEstimates are weighted toward forecasts from analysts who are more consistently accurate.
Operating profit for Samsung's chip business likely tumbled by 78% to 1.9 trillion won, an average of seven analyst estimates showed.
