Samsung Electronics – Preliminary 3Q Results
Samsung Electronics (005930.KS) reported preliminary 3Q results of 76 trillion Won ($53.88b US) and operating profit of 10.8 trillion Won ($7.66b US), with sales down 1.6% q/q but up 2.7% y/y while op profit was down 23.4% q/q and down 31.7% y/y . Both sales and op profit were below consensus of 78.3 trillion Won and 11.86 trillion Won (missed by 2.9% and 8.9% respectively). Samsung does not provide detail on results until the call on October 27. That said we expect the weakness in operating profit was the result of weakening demand in Samsung’s memory business, with a bit of positive momentum from Samsung Display, which saw the ramp of display production for the recent Apple (AAPL) iPhone 14 family release.
DRAM Pricing spiked last year, however, as did LCD panel prices, the reduction n COVID infections and the subsequent reductions in mandated sequestering, reduced the demand for PCs, laptops, and monitors. Server memory remained strong even as consumer memory demand weakened, and DRAM pricing forecasts made early this year, despite being down y/y were somewhat optimistic. By July however, server demand also began to weaken and 2022 DRAM pricing estimates were revised further downward, as shown in the table below. As Samsung is the leader in the DRAM market, with a 43.5% share in 2Q, the impact of weaker demand and pricing is a given, with a lesser impact on SK Hynix () and Micron (MU), who have a 27.4% and 24.5% DRAM market share, with the top three accounting for 95.4% of the total market. More detail after the conference call later this month.
DRAM Pricing spiked last year, however, as did LCD panel prices, the reduction n COVID infections and the subsequent reductions in mandated sequestering, reduced the demand for PCs, laptops, and monitors. Server memory remained strong even as consumer memory demand weakened, and DRAM pricing forecasts made early this year, despite being down y/y were somewhat optimistic. By July however, server demand also began to weaken and 2022 DRAM pricing estimates were revised further downward, as shown in the table below. As Samsung is the leader in the DRAM market, with a 43.5% share in 2Q, the impact of weaker demand and pricing is a given, with a lesser impact on SK Hynix () and Micron (MU), who have a 27.4% and 24.5% DRAM market share, with the top three accounting for 95.4% of the total market. More detail after the conference call later this month.
DRAM Spot Price - DDR4 8GB - Source: Trendforce
Samsung Electronics - Sales/Operating Profit - Source: SCMR LLC, Company Data
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