Samsung predicts 56pc drop in 2Q profit on weak chip market

July 05, 2019

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The South Korean tech giant estimated an operating profit of 6.5 trillion. — AFP/File
The South Korean tech giant estimated an operating profit of 6.5 trillion. — AFP/File

Samsung Electronics Co. said Friday its operating profit for the last quarter likely fell more than 56 per cent from a year earlier amid a weak market for memory chips.

The South Korean tech giant estimated an operating profit of 6.5 trillion won ($5.5 billion) for the April-June quarter, which would represent a 56.3pc drop from the same period last year.

The company said its revenue likely fell 4pc to 56 trillion won ($48 billion), but did not provide a detailed account of its performance by business division. It will release a finalised earnings report later this month.

Analysts say falling prices of DRAM and NAND memory chips are eating into the earnings of the company, which saw its operating profit during the first quarter drop more than 60pc from last year.

U.S. sanctions on Chinese technology giant Huawei may have also contributed to Samsung's profit woes by reducing its chip shipments and pushing down chip prices farther.

Samsung, which is the world's biggest maker of semiconductors and smartphones and a major producer of display screens, is also bracing for the impact of tightened Japanese controls on exports of high-tech materials used in semiconductors and displays.

The Seoul government sees the Japanese measures, which went into effect on Thursday, as retaliation against South Korean court rulings that called for Japanese companies to compensate ageing South Korean plaintiffs for forced labour during World War II. Seoul plans to file a complaint with the World Trade Organisation.