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Samsung warns of 56% profit slide, but two of its biggest rivals will help it recover

Samsung earnings

Samsung on Tuesday released its earnings guidance for the third quarter, ahead of unveiling its actual results for the quarter later this month, and quickly made headlines for saying the company is expecting to reveal a 56% slide in its profit. The decline, according to the company, is attributable to falling demand for Samsung’s memory chips — one of the electronics giant’s myriad product lines in addition to big-ticket items like TVs and its smartphone brands.

Per the company’s announcement, Samsung is expecting to record an operating profit of 7.7 trillion Korean won (equal to $6.5 billion) for the three-month period that ended in September. That’s down from 17.57 trillion Korean won (or $14.7 billion) for the same period in 2018.

According to Daiwa Capital Markets analyst SK Kim, via CNN Business, Samsung is likely to see a turnaround in its memory chip business soon, though, thanks to “advances in extreme ultraviolet lithography,” which is an important breakthrough relative to chip manufacturing. Additionally, Samsung’s work for other device makers like Apple should help generate a reversal of its fortunes.

In a research note issued in recent days, Daishin Securities analysts said they anticipate growth in Samsung’s display and memory chip units as a result of high-profile new phone releases from Apple as well as Huawei.

There are also two other factors relative to phones that should help give Samsung a boost soon. When we’re talking about Samsung, Huawei, and Apple, those are the three largest smartphone manufacturers in the world. Analysts are expecting the current troubles Huawei is facing — the US-led opposition and blacklist facing the company have put a dent in its growth ambitions this year — should indirectly benefit Samsung as a consequence.

According to the research firm Canalys, Samsung reached a 40% market share in Europe in August. That’s a 5-year record for the company there. Likewise, the Galaxy Note 10 is continuing to have a positive impact on the company’s bottom line — all of which is to say that any slump third quarter doesn’t seem like it will affect the company for long.

Andy is a reporter in Memphis who also contributes to outlets like Fast Company and The Guardian. When he’s not writing about technology, he can be found hunched protectively over his burgeoning collection of vinyl, as well as nursing his Whovianism and bingeing on a variety of TV shows you probably don’t like.

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