Samsung Electronics (OTC:SSNLF) has issued a warning, predicting a significant drop in third-quarter profits, due to various factors including one-time costs and a surge in supply from Chinese rivals.
What Happened: On Tuesday, the South Korean tech giant announced an estimated operating profit of approximately 9.10 trillion won ($7.6 billion) for the quarter ending in September. This represents a 274% increase from the previous year’s 2.43 trillion won.
The company’s memory business has been impacted by “one-time costs and negative effects,” which include inventory adjustments by mobile customers and an increase in the supply of legacy products by Chinese memory companies, Samsung stated.
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These memory chips are used in devices such as laptops and servers, and Samsung is the leading manufacturer of these chips. The company is also the world’s second-largest player in the smartphone market.
Furthermore, the company reported that shipments of HBM3E chips to major customers were delayed. In August, it was reported that Nvidia Corp. (NASDAQ:NVDA) successfully tested and approved Samsung Electronics' fifth-generation high bandwidth memory chips, known as HBM3E, for use in its artificial intelligence processors.
Price Action: Following the release of the earnings guidance, Samsung’s share price, which has already fallen by more than 24.12% year-to-date, dropped by an additional 0.7%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote