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Samsung flags 56% fall in Q3 operating profit on memory chip slump

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The logo of Samsung Electronics is seen at its office building in Seoul South Korea

It would also be a quarter-on-quarter recovery of 16.67% - up from 6.6 trillion won in the second quarter.

Its operating profit for the period slipped further, hitting 7.7 trillion Korean won, 56pc lower than the same period a year earlier. The company will release more detailed quarterly earnings later this month.

The chip-making division, the mainstay of Samsung, was believed to have logged a better-than-expected operating profit on the fast inventory adjustment and the product price rebound of the NAND flash memory chips.

Strong sales of Samsung Electronics' Galaxy Note 10 smartphone series are limiting forecast profit falls at the South Korean tech giant, raising hopes it is getting back on a growth track after years of moribund sales. However, during the same period previous year, Samsung Electronics posted some of its largest ever profits and sales. Still, that is a profit decline of more than 50% for the Suwon, South Korea-based company.

The preliminary revenue was set at 62 trillion won (52 billion USA dollars) in the third quarter, surpassing the market consensus of around 61 trillion won (51 billion US dollars).

Samsung reported gross sales of round 62 trillion Korean gained (£42bn) for the three months to the end of September, down round 5pc one year on one year. CLSA Senior Analyst Sanjeev Rana told CNBC, however, that things are improving for the industry, and Samsung actually enjoyed better-than-expected memory shipments in the third quarter.

The plunge is also another troubling indication Samsung Electronics hasn't overcome its massive loss of market share in China and its insistence on developing pricier phones in a market now leaning towards cheaper models such as those produced by Chinese competitors, Xiaomi and Oppo.

Samsung, the world's largest producer of mobile phones and smartphone displays, is benefiting from solid demand for its Note10 and for Apple's iPhone 11 Pro, which uses the company's OLED displays.

The Note 10 was released only in 5G model in the domestic market on August 23.

It tumbled 56.2 percent compared with the same quarter of a year ago when Samsung recorded its record operating profit, but it was up 16.7 percent from the previous quarter. The earnings guidance was announced before the market opened.

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