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Samsung set to see first decline in nearly 3 years
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A visitor walks near the logo of Samsung Electronics in Seoul, South Korea, October 28, 2021. /CFP
A visitor walks near the logo of Samsung Electronics in Seoul, South Korea, October 28, 2021. /CFP

A visitor walks near the logo of Samsung Electronics in Seoul, South Korea, October 28, 2021. /CFP

Samsung Electronics Co. Ltd.'s third-quarter profit could tumble 25 percent, the first year-on-year decline in nearly three years, as an economic downturn saps demand for electronic devices and the chips that power them.

Operating profit for Samsung, the world's biggest memory chip and smartphone maker, likely fell to 11.8 trillion won ($8.3 billion) in the July-September quarter from 15.82 trillion last year, according to a Refinitiv estimate from 22 analysts. 

It would be the first profit decline since the first quarter of 2020, early on in the pandemic, and the lowest level of quarterly profit since the first quarter of 2021.

Globally, inflation is on the rise, central banks are aggressively hiking interest rates, fears of recession are growing and uncertainty about the fallout from Russia-Ukraine crisis is ever-present. As a result, businesses and consumers alike have reined in spending.

"Being the world's top memory chip maker, top in TV and mobile OLED displays, and top in smartphone shipments, Samsung is highly sensitive to the economy, with profits easily linked to demand," said Greg Roh, head of research at Hyundai Motor Securities.

Prices of some DRAM memory chips, widely used in smartphones and PCs, tumbled 14 percent in the quarter while prices for NAND flash chips, used in data storage, fell 8 percent, according to TrendForce data.

Shares in Samsung, which will announce preliminary results at about 2340 GMT on Thursday, have fallen about 30 percent this year. That compares with a 37 percent slump for the Philadelphia Semiconductor index.

Memory chip rival Micron Technology last Thursday significantly cut investments, by more than 30 percent, for the next year and warned of tougher times ahead.

(Source: Reuters with edits)

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