Samsung’s operating profit in the fourth quarter of 2022 could be in trouble, according to a new estimate by Goldman Sachs. The global investment and banking firm has lowered its operating profit estimate for Samsung Electronics to KRW 5.8 trillion ($4.5 billion) for the fourth quarter, a decrease of 25.6% from its previous estimate of KRW 7.8 trillion. If the estimate turns out to be accurate, it would represent a 58.3% drop in Samsung’s operating profit from the same quarter in 2021.

Goldman Sachs forecasts sharp drop in Samsung’s profit

The decrease in the estimate is largely due to a forecast of a slashed operating profit in Samsung’s semiconductor business unit. Goldman Sachs estimates that Samsung will reap KRW 1.5 trillion in operating profit from its chip-making business in the fourth quarter, a massive 83% drop from the company’s operating profit from the semiconductor unit in the fourth quarter of 2021. This would be the lowest operating profit for the semiconductor business since 2009.

Samsung semiconductor

Goldman Sachs’ earnings estimates for Samsung differ from those of local brokerage firms, which have projected more optimistic numbers. The global investment bank attributed the downward adjustment to weakened performances in the global memory chip sector and Samsung’s decreased shipments of smartphones and TV sets. It also expects Samsung to post a larger fall in operating profit next year due to the global market’s memory chip down cycle.

While some local analysts predict a turnaround for the memory chip market in 2024, the near-term outlook for Samsung is not looking good. The company will likely face a challenging fourth quarter in 2022 and a difficult year in 2023 due to decreased demand for semiconductor chips and other factors. It remains to be seen how Samsung will navigate these challenges and if it will be able to bounce back in the future.

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