Samsung narrows loss from chip business as foldable smartphones save face

The strong sales of Galaxy Z Fold 5 and Galaxy Z Flip 5 foldable smartphones somewhat offset the continuing profit loss of the tech giant's chip business during the third quarter.
Written by Cho Mu-Hyun, Contributing Writer

Samsung is the world's largest producer of memory chips. Image: Samsung

Samsung narrowed its loss from its chip business in the third quarter while strong performance from its mobile business thanks to the launch of new foldable smartphones helped maintain profitability overall for the quarter.

The South Korean tech giant said on Tuesday that it recorded 67.4 trillion won in revenue and 2.43 trillion won in operating profit, a drop of 12% and 77%, respectively, from a year ago. However, both revenue and operating profit increased substantially from the previous quarter.

The company credited the recovery from the previous quarter to strong sales of its flagship smartphone models __ the Galaxy Z Fold 5 and Galaxy Z Flip 5 __ and the accompanying strong demand for mobile displays.

Samsung has been hit by a downturn in the semiconductor, or chip, market as well as low demand for consumer electronics from the global economic slowdown.

The drop in demand for chips, which started around the July-September period last year, has been especially hurtful to the profits of the company, which is the world's largest maker of memory chips. In the second quarter of this year, it recorded its lowest operating profit in 14 years.

During the third quarter, multiple customer requests to secure more memory chips were made due to the perception that the market has hit its bottom spread, Samsung said. The prices of DRAM and NAND have been going up since the start of the third quarter.

The chip business, called Device Solution Business by Samsung, recorded 3.75 trillion won in operating loss, a substantial improvement from 4.36 trillion won in operating loss in the previous quarter.

Meanwhile, at the same time, operating profit from the company's mobile business, called Mobile Experience Business by the firm, increased slightly from a year ago despite the global economic stagnation, giving some credence to Samsung's claim that foldables were becoming mainstream.

Combined with Samsung's Network Business, which sells telecom equipment, the two business units together recorded 3.3 trillion won in operating profit, a slight increase from 3.24 trillion won last year.

There was a recovery in the global smartphone market and sales of foldable devices, tablets, and wearables were strong while the Galaxy S23 Series launched earlier in the year also continued its sales momentum, according to Samsung.

Samsung Display, which supplies OLED panels to parent company Samsung as well as Apple, also recorded 1.94 trillion won in operating profit, its second-highest in the past three years, during the third quarter.

Looking ahead, the memory market conditions are expected to recover in 2024 though macroeconomic uncertainties are expected to persist, Samsung said.

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