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SEOUL: Samsung Electronics Co Ltd announced better results in the second half of the year after recording a 60% drop in first-quarter profits, indicating a rise in expected sales of memory chips and smartphones.
The world's largest semiconductor manufacturer, however, warned that short-term difficulties would be more acute in the second quarter as memory chip prices may fall further before rebounding demand, replenishing data centers later in the year .
"For the second half of 2019, the company expects an increase in the demand for memory chips for high-density products, but uncertainties related to the external environment will persist," said the giant. South Korean technology in a statement.
Struck by falling chip prices and the slowing demand for display screens, Samsung's operating profit reached 6.2 trillion won ($ 5.4 billion) in the quarter from January to March, according to forecasts released this month.
Revenues fell 13.5% to 52.4 trillion won, which is also in line with previous estimates.
Samsung's semiconductor business was down 64 percent from its operating profit to 4.1 billion won, while the screen recorded a loss of 560 billion won.
Memory chip makers have been penalized by the slowdown in the global smartphone market and the declining demand for data centers behind cloud services, in a context of a broader economic downturn.
SK Hynix, Samsung's smallest rival, announced last week its thinnest quarterly operating profit of the last two years, while declaring itself confident that demand for chips should recover at the end of the year. 39; year.
Samsung said its customers on the DRAM server chip would begin replenishing their inventory from the end of the second quarter, while newer smartphone models would support mobile DRAM sales.
An easing of trade tensions between China and the United States could also release some of the accumulated demand for consumer electronics products and incite Chinese cloud service providers who had stored chips in anticipation of a protracted war to reduce inventories to more normal levels, badysts say. I said.
"On the macroeconomic front, China could give a boost to its IT industry to support the economy and if a trade deal were signed between China and the US, they would lead to increased demand for Samsung's products, such as chips, "said senior badyst Song Myung. sup to HI Investment and Securities said.
MOBILE WORKS
The world's largest smartphone maker said its mobile phone business had recorded a 40% drop in operating profit, falling to W 2,300 billion in the first quarter.
Its rival and supplier, Apple Inc., hopes to resume the growth of its mobile business with its latest phone, with a large screen curved.
But in a blow to its renewed interest in innovation, Samsung delayed global sales of its next foldable phone after reviewers discovered display issues.
Samsung, which provides screens for its own folding phones, is forecasting weak Q2 earnings in the display panel sector, as demand for flexible displays remains weak.
However, the demand for flexible billboards should accelerate and sales of its smartphones should also increase in the second half, driven by new models in all segments, including the low-end Galaxy A series .
(Report by Ju-min Park and Heekyong Yang, edited by Stephen Coates)
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