Stronger won to test chip, display firms' Q3 profitability

The Korean won's strengthening against the US dollar is creating a new challenge for chipmakers, display firms, and other electronics companies that conduct primarily dollar-denominated transactions. As a result, brokerages have reduced their earnings estimates for the third quarter. According to Bank of Korea data, the Korean currency traded at 1,480 won against the dollar on July 16, before surging to 1,413 won on August 17 and 1,382 won on September 17.

This indicates a 6.6 percent decline in the dollar-won exchange rate over the two-month period. The shift in the exchange rate became more pronounced from August, with the Korean currency appreciating to 1,336 won per dollar on September 9. This development prompted brokerages that had based their earnings forecasts on a dollar-won exchange rate of 1,450 won per dollar to start cutting their estimates.

Consequently, the consensus on major companies like Samsung Electronics and SK hynix's third-quarter earnings has dropped. According to market tracker FnGuide, brokerages' consensus on Samsung Electronics' third-quarter operating profit was 122.35 trillion won, equivalent to $88.27 billion at the time.