Dow Jones Newswires: Samsung Electronics expects weakest quarterly earnings in 14 years

Samsung Electronics
005930,
-2.23%
said Friday that it expects its second-quarter operating profit to fall 96% on year, which would be its weakest performance in more than 14 years.

The preliminary earnings outlook suggests that the world’s largest manufacturer of memory chips, smartphones and televisions continues to struggle with weak global demand for tech products and semiconductors despite chip supply being reduced to address a glut.

The South Korean tech giant said it estimates operating profit at 600 billion won ($458.2 million) for the April-June period — its worst quarterly earnings result since the first quarter of 2009. That compares with an operating profit of KRW14.100 trillion in the second quarter of 2022.

Revenue is expected to drop 22% on year to KRW60 trillion for the June quarter, Samsung said.

Still, the company’s preliminary operating-profit forecast beat the FactSet-compiled market consensus estimate of KRW217.33 billion for the quarter.

Most market analysts said they see the global tech-industry downturn nearing its end, with the decline in chip prices easing recently.

Global semiconductor makers are cutting supply to support prices for memory chips, while demand for some powerful computing chips used in artificial-intelligence applications remains brisk, they said.

Citigroup analyst Peter Lee said in a recent research note that he expects Samsung to post better-than-expected earnings for the full year on a likely solid memory-chip market recovery in the second half and a resilient smartphone business.

Samsung is due to report full quarterly earnings later this month.

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