Samsung's chip business continues to lose, with global chip demand expected to recover.

Samsung,The largest domestic foreign exchange trading company the world's largest memory chip and smartphone manufacturer, stated in an announcement, "Looking into the second half of the year, considering the chip industry's production cuts, the (memory chip) market is expected to gradually stabilize."

Samsung (KS:005930) reported that its profits plummeted by 95% in the June quarter, despite the continued downturn in the chip industry due to weak semiconductor demand from consumer electronics to servers, under the circumstances of production reduction.

Operating profits from April to June dropped from 14.1 trillion won in the same period two years ago to 669 billion won (about 527 million US dollars).

This is largely in line with the company's estimate of 600 billion won for this month and marks the second lowest quarterly profit in 14 years.

Revenue fell by 22% to 60 trillion won.

Chip Losses

Samsung's chip division reported a loss of 4.36 trillion won for the quarter, continuing its departure from what is usually Samsung's biggest money maker. The profit for the same period two years ago was 9.98 trillion won.

Chip losses were slightly reduced from the previous quarter's 4.58 trillion won, due to higher-than-expected shipments of DRAM chips, which store application information during system use, driven by strong memory chip demand from artificial intelligence.

Samsung's chip contract manufacturing business performed worse, encountering a "significant" profit decline in the June quarter due to short-term demand uncertainty,

The world's largest contract chip maker, Taiwan's TSMC, cut its annual sales forecast this month and warned of cost challenges posed by weak global demand.

After chip division losses exceeded market expectations, Samsung's stock price fell by 0.7% in early trading, while the overall market rose by 0.6%.

The company stated that its second-quarter capital expenditure reached 14.5 trillion won, of which 1.35 trillion won was used for chips.

According to CEO Kyung Kye-hyun, Samsung is expected to start shipping advanced 4nm chips from its Texas, Taylor factory by the end of 2024 and establish more production lines in Pyeongtaek, South Korea.

Samsung's mobile business reported a profit of 3.04 trillion won for the June quarter, higher than 2.62 trillion won for the same period two years ago. The company predicts overall smartphone market recovery in the second half of the year, especially in the high-end market, with a return to year-on-year growth.

(Note: 1 USD = 1,269.2200 Korean won)

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