SEOUL (Reuters) -- Samsung Electronics reported a likely 96% plunge in second-quarter operating profit on Friday, largely in line with forecasts, as an ongoing chip glut drives large losses in the tech giant's key business despite a supply cut.
The world's largest memory chip and smartphone maker estimated its operating profit fell to 600 billion won ($458 million) in the April-June quarter, from 14.1 trillion won a year earlier, in a short preliminary earnings statement.
We maintain HOLD and TP of KRW16,000 on LGD. We see (1) the mid-/large-size LCD (TV, IT) and large-size OLED (WOLED) segments remaining in the red as the global economic slowdown erodes demand and (2) the small-/mid-size OLED (P-OLED) segment’s profit margins affected by fluctuations in capacity utilization (caused by North American clients’ new model releases). Given the unpredictability of downstream demand,
LGD profit margins should be affected by (1) LCD line restructuring, (2) increases in large-size OLED panel shipments and (3) investment efficiency.