Samsung Electronics, the global tech giant, is set to announce an 80% drop in its operating profit for the third quarter of this year, down to $1.56 billion. This staggering decline is primarily attributed to the persistent chip glut affecting the company’s core business. Industry analysts had expected a downturn, but the extent of the losses has taken many by surprise.
To counter the ongoing chip surplus, Samsung implemented production cuts earlier this year, reducing inventory and navigating through one of the most challenging periods the industry has faced in decades. However, this strategy has not been without consequences. The company’s profits have suffered due to decreased sales and increased production costs.
Despite these challenges, there are glimmers of hope on the horizon. Recently, Samsung secured a contract to supply memory chips to a major U.S. company specializing in data centers, hinting at a potential upswing in demand. Moreover, the company has been making progress in the computing accelerators market, utilizing the latest HBM memory technology.
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