Mar 25, 2019
Samsung warns of weak financial results on memory-price slump
, Bloomberg News
Samsung Electronics Co. said its first-quarter financial results will be lower than market estimates because of a slump in memory-chip prices, a surprise profit warning ahead of preliminary results due early next month.
The prices for memory chips and displays fell more than expected, leading to the shortfall, the Suwon, South Korea-based company said in a statement on Tuesday. The company said it will use its resources to be price competitive in the market.
The warning from the world’s biggest chipmaker underscores a steeper-than-expected dive in memory-chip prices amid a stagnant smartphone market. That’s been exacerbated by a global economic slowdown and U.S.-China trade tensions that have hit demand for semiconductors that account for the biggest portion of Samsung’s profits.
Prices for dynamic random-access memory slid almost 30 per cent from the originally projected 25 per cent in the first quarter, “resulting in the sharpest decline in a single season” since 2011, TrendForce said on March 5. Inventory levels also continued to rise after overall contract prices dropped in the fourth quarter, according to the research firm.
Together with SK Hynix Inc. and Micron Technology Inc., Samsung controls the bulk of the market for DRAM chips, used to store data on personal computers and servers. Samsung said in January it was reducing spending this year to focus on the profitability of its memory operations after its net income slumped the most in two years.
Samsung usually provides an estimate of its revenue and operating profit days after each quarter ends. The company then provides a full-breakdown of its performance later in the same month, holding a conference call with investors.
Aside from its memory-chip woes, Samsung has been struggling to stem the decline in its smartphone sales as consumers wait longer to upgrade their devices. Its display division, which provides smartphone screens to Apple Inc. has also been hurt by less-than-expected sales of iPhone devices and competition from Chinese makers of monitors and televisions.
