The world’s biggest maker of memory chips, Samsung has warned that its operating profit in the fourth quarter for the period ended 30 December would likely fall 34 percent to 7.1 trillion won, that is about $6.1billion from 10.8 trillion won in 2018.
Like other chipmakers, Samsung has struggled since late 2018 as a weak global economy curbed spending by data centre customers and rising inventories of memory chips squeezed prices, ending a two-year industry boom.
But hopes for a rebound in chip prices are gaining momentum, and an expected easing in the Us-china trade war is lifting optimism that demand from server and 5G smartphone customers will return this year.
In the previous quarters, Samsung’s operating profit had more than halved from the same period a year earlier.
Samsung expects consolidated sales for the quarter to be around 59 trillion won, which missed market consensus of around 60.7 trillion won from Refinitiv Smartestimate.
That was likely due to declines in the company’s revenue from the display business, which supplies smartphone and TV screens, as well as lower prices for memory chips.
Samsung’s Q4 mobile shipments rose from last year as sales in Latin America, South Asia and Europe were more robust,” said analyst Tom Kang at market researcher Counterpoint. “This was partially from Huawei’s overseas losses and Samsung’s new A-series,” he said, referring to Chinese rival Huawei Technologies Co Ltd which is tackling restricted access to U.S. suppliers.
Premium smartphone sales also boosted earnings, Kang said.
Samsung is expected to announce a new version of its flagship Galaxy S smartphone and a foldable handset on Feb. 11.
In displays, Samsung shut a liquid-crystal display production line in September, hit by falling prices and slower demand for television sets and smartphones coupled with rising competition from Chinese rivals. Samsung plans to convert the line for more advanced displays.
