• Samsung could face a 25% loss in profits on a year-over-year basis.
• This would be the lowest quarterly profit recorded since Q1 2021.
• Samsung’s mobile division could face a 17% decline in sales.

Samsung Electronics Co Ltd’s (005930.KS) third-quarter profit could fall 25%, the first year-over-year loss in nearly three years, as the economy saps demand for electronic products and processors.

Globally, inflation is rising, central banks are rapidly boosting interest rates, recession fears are building, and Russia’s invasion of Ukraine remains uncertain. Consequently, both firms and consumers have reduced spending.

According to Refinitiv SmartEstimates from 22 analysts, Samsung, the world’s largest maker of memory chips and smartphones, saw its operating profit fall to 11.8 trillion won ($8.3 billion) in the quarter between July and September.

“Being the world’s top memory chip maker, top in TV and mobile OLED displays, and top in smartphone shipments, Samsung is highly sensitive to the economy, with profits easily linked to demand,” said Greg Roh, head of research at Hyundai Motor Securities.

It would be the first profit decline since Q1 2020, early in the epidemic, and the lowest quarterly profit since Q1 2021. Until this quarter, strong device demand as people stayed home drove South Korean tech firm profits.

The operating profit of Samsung’s chip division likely decreased by roughly a third to 6.8 trillion won, according to the mean of seven estimations.

DRAM memory chips, used in smartphones and PCs, plummeted 14% in the quarter, while NAND flash chips fell 8%, TrendForce data shows.

Shares of Samsung Electronics, which will release preliminary results on Friday at approximately 8.40 p.m. local time (23:40 p.m. GMT on Thursday), are down approximately 30% this year. In comparison, the Philadelphia Semiconductor index fell 37%. (.SOX).

Forecasts predict a 17% decline to 2.8 trillion won for Samsung’s mobile division, despite the arrival of the company’s pricey new foldable phones during the quarter, which increased the average selling price.

Kim Yang-jae, an analyst at Daol Investment & Securities, believes that Samsung’s smartphone shipments fell 11% in the third quarter compared to the same period a year earlier, to around 62.6 million smartphones.

Micron Technology (MU.O), a competitor in the memory chip industry, slashed its investments for the coming year by a large amount last week and warned of harsher times ahead.

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