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The South Korean tech giant said Tuesday that its profits for the first quarter of the year would fall short of market expectations due to declining demand for memory chips and billboards. display for electronic devices.
Samsung had already warned in January that its revenue and operating profit would fall by a double-digit percentage this quarter, citing the weakness of these same companies.
Tuesday's warning is only the last sign of the pain felt by some of the world's leading manufacturers of technological equipment and their suppliers, particularly in the smartphone sector.
"All this is related to the outlook of the smartphone market, which is not really dynamic at the moment," said Kiranjeet Kaur, a Singapore-based analyst and working for the IDC research firm. .
Analysts believe that various factors are hurting the industry, including increasing market saturation, less frequent consumer phone substitution, and frustration with rising prices.
The problems are reflected in the supply chains. Smartphone manufacturers are left with more components than needed to meet demand, which means that new orders for chips and displays will be weak, Kaur said.
Samsung is the biggest seller of smartphones in the world. But the company also manufactures key components for competing handset manufacturers. This means that the industry suffers from problems on both fronts.
Samsung's shares lost up to 1.3% during the first transactions in Seoul on Tuesday. They then recovered some of their losses to close around 0.6%.
Apple's difficulties seem to hurt Samsung, which provides organic light-emitting diode (OLED) displays for the latest iPhones. Samsung said Tuesday that the benefits of its screen activity have deteriorated due to declining demand from its large OLED customers.
"Samsung has been driving OLEDs in high-end phones, but with slower premium phone sales, Samsung will face lower demand for its displays or adjust its strategy," said Kaur.
The South Korean company said the fierce competition from its Chinese rivals was also driving down prices in the display sector.
The current cycle of the chip "has peaked," said Kaur, but it could be boosted in the future if smartphones began to use more artificial intelligence and 5G applications, which require greater computing power.
"But it will take time," she warned.
Sophie Jeong and Eugene Jun contributed to this report.
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