The list of industry analysts skeptical about Samsung’s prospects in the final quarter of the year keeps growing as Korea Investment Holdings and HI Investment & Securities both slashed their estimates on Wednesday. The latter reduced its earnings forecast of 16.5 trillion won by 4.8 percent, reducing it 15.7 trillion won, or approximately $14.5 billion. HI Investment & Securities expressed even stronger doubts about Samsung’s performance in the current quarter, having dropped the same estimate by 7.8 percentage points, i.e. forecasting an operating profit of $13.46 billion.
The development marks the fifth and sixth occasion on which major analysts dropped their estimates of Samsung’s Q4 2017 performance in the last month, Bloomberg reports. While not all investors accepted the reduced targets without skepticism, industry watchers remain adamant that Samsung’s performance surges are nearing their end as the company’s growth induced by its semiconductor operations isn’t sustainable. The South Korean tech giant overtook Intel as the world’s largest chipmaker earlier this year and while that achievement was only based on quarterly revenues, Samsung also has a realistic chance of surpassing the Santa Clara-based company by annual sales, according to recent estimates. As the strong global demand for various memory chips is projected to decline and is already believed to have started waning in recent months, analysts believe Samsung’s financial performance will proportionally follow suit. The company may hence not be able to repeat its record-breaking 2017 results for the foreseeable future, latest data suggests.
Besides an expected drop in the worldwide chip demand, Samsung’s prospects are also reduced due to the current state of its management, with its de facto chief Jay Y. Lee presently being imprisoned and having a slim chance of successfully appealing his five-year sentence for bribing top government officials and one of Samsung Electronics three CEOs unexpectedly announcing his resignation earlier this year, being set to leave the company in March after claiming the firm is experiencing “an unprecedented crisis.” Coupled with the disbandment of the chaebol‘s Future Strategy Office that was a direct consequence of Mr. Lee’s incarceration, Samsung’s many subsidiaries are now significantly less coordinate than they’ve been in recent times and may struggle to continue maximizing their synergies without strong leadership, some industry watchers believe.