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 substantial dollar-denominated transactions. As a result, financial institutions have revised their third-quarter earnings estimates downward. On July 16, according to the Bank of Korea, the Korean currency was at 1,480 won per dollar.

It continued to strengthen through August and September, hitting 1,413 won on August 17, and 1,382 won on September 17. This represents a 6.6 percent decline in the dollar-won exchange rate over the two-month span. The faster depreciation of the Korean currency accelerated in August, with the won reaching as low as 1,336 per dollar by September 9.

This currency shift has prompted earnings forecasters who initially based their projections at 1,450 won per dollar to start lowering their estimates. Consequently, the consensus earnings for major companies like Samsung Electronics and SK hynix have dropped. According to market tracking firm FnGuide, the average estimate among brokers for Samsung Electronics' third-quarter operating profit was 122.35 trillion won, equivalent to $88.27 billion.