Expectations are rising for third-quarter results at Korea's semiconductor and display corporations, including Samsung Electronics and SK hynix, and Samsung Display and LG Display. In particular, Samsung Electronics is expected to rebound on higher memory semiconductor prices and a narrower deficit at its foundry (contract chip manufacturing) business unit, with some projecting a return to the 10 trillion won operating profit club. SK hynix is also likely to set another all-time record.
According to the industry on the 29th, Samsung Electronics is expected to announce its third-quarter preliminary results in the early part of the third week after the Chuseok holiday next month. Samsung Electronics has typically released preliminary results about a week after the end of each quarter, but this time the announcement is expected to be delayed due to the long Chuseok holiday.
Samsung Electronics is expected to have bottomed in the second quarter and to rebound in the third quarter. According to FnGuide, the consensus for Samsung Electronics' third-quarter results is 83.5515 trillion won in revenue and 9.7524 trillion won in operating profit. By operating profit, that would be up 6.2% from a year earlier and 108.6% from the prior quarter. Recently, domestic brokerages have also issued outlooks for operating profit in the 10 trillion won range.
The rebound in Samsung Electronics' results is expected to be led by the Device Solutions (DS, semiconductors) institutional sector, which was sluggish throughout the first half of this year. Earlier, the semiconductor institutional sector posted 400 billion won in operating profit in the second quarter due to weak supply of high-bandwidth memory (HBM) and provisions for inventory asset. In the third quarter, there is a strong chance of improvement as memory prices surge on a shortage of commodity memory driven by expanded HBM production at major memory corporations and rising server DRAM demand.
DS Investment & Securities predicted, "With demand for general-purpose servers recently being detected, the DRAM upcycle will continue into next year," adding, "The reversal in DDR4 (the average selling price (ASP) of legacy DRAM) will accelerate the shift to DDR5 when customers expand new servers." Morgan Stanley also said, "We are in a phase where price increases for premium products, powered by artificial intelligence (AI), are offsetting constraints on demand recovery," projecting that the DRAM price uptrend will continue through the first half of next year.
However, projections vary somewhat on the size of Samsung Electronics' operating profit outlook. Kiwoom Securities expected a V-shaped rebound, projecting 5.6 trillion won in operating profit from the semiconductor institutional sector alone, while KB Securities and others presented outlooks in the 3 trillion won range. Many other brokerages estimate operating profit in the 4 trillion won range. A semiconductor industry official said, "It is clear that results will rebound in the third quarter, but it does not appear the market will suddenly enter a super-boom phase," adding, "If we gauge when HBM will be fully reflected in results, the trend will likely be clearer in the fourth quarter than in the third."
Market analyses continue to suggest that SK hynix will extend its streak of record results in the third quarter. In particular, amid a strong memory market led by AI demand, both DRAM and HBM are showing robust performance. In the securities market, SK hynix, which delivered an earnings surprise by surpassing 9 trillion won in operating profit in the last second quarter, is expected to achieve operating profit in the 10 trillion won range again in the third quarter. Hanwha Investment & Securities estimated SK hynix's third-quarter revenue and operating profit at 24.7 trillion won and 11.2 trillion won, respectively, projecting that it will once again set an all-time high.
Helped by revenue growth in organic light-emitting diode (OLED) displays, whose demand base is expanding from smartphones and TVs to IT, wearables, and PCs, the results of Korea's display corporations are also expected to rebound. For LG Display, third-quarter outlooks are gradually rising. According to FnGuide, the third-quarter operating profit consensus for LG Display is 363.3 billion won. As tailwinds for small- and mid-size panels continue, some brokerages have raised their operating profit outlooks into the 400 billion won range. The average consensus has risen to 435.4 billion won, and the company is expected to achieve its largest operating profit in 15 quarters.
Samsung Display is also expected to post solid results on the back of strong sales of Samsung Electronics' foldable phone series, and preparations are in full swing to supply foldable OLEDs for Apple. Analysts say profitability will continue to improve as foldable OLEDs, considered a high value-added product among OLED panels, take up a greater share.