Samsung expects Q3 profits to drop nearly 80 percent

Samsung Electronics said Wednesday it expected third-quarter operating profits to plunge nearly 80 percent, as the firm grapples with weak demand for memory chips.

Operating profits of 2.4 trillion won ($1.8 billion) were expected for the July-September period, the South Korean tech giant said in a statement, down 77.9 percent from a year earlier.

Sales are expected to drop 12.7 percent in the same period to 67 trillion won, it added.

The firm is the world's largest smartphone maker and the flagship subsidiary of Samsung Group, by far the largest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy.

South Korean chipmakers, led by Samsung, have enjoyed record profits in recent years as prices for their products soared, but the global economic slowdown has dealt a blow to memory chip sales.

Demand swelled during the pandemic as consumers bought computers and smartphones during lockdowns, prompting chipmakers to ramp up production.

But consumer appetite quickly diminished as lockdowns lifted, and weakened further in the face of soaring inflation and rising interest rates.

In April, Samsung said it would make a "meaningful" cut in memory chip production, following the lead of rivals SK Hynix and Micron.

Samsung is expected to release its final earnings report at the end of this month.