Samsung looks to chip recovery as Q2 profit falls 56%

July 31, 2019 09:48
Samsung has warned of continuing uncertainties in relation to the memory chip and mobile businesses. Photo: Reuters

South Korean tech giant Samsung Electronics reported on Wednesday a 56 percent slide in second-quarter profit, hit by declines in semiconductor prices amid oversupply, Reuters reports.

The company expects the chip market to bottom out and start to recover in the second half, the report said. 

“Server demand is expected to increase gradually as customers adjust their inventory levels and resume purchasing, while PC demand is also likely to expand,” Samsung was quoted as saying, referring to demand for its DRAM chips.

Samsung however said it faces “persistent” uncertainties in the memory and mobile businesses in the second half.

While it gave no further details on Wednesday, it has previously cited the US-China trade war as a drag on earnings.

South Korea’s chip giants also have been hit by Japanese curbs on the export of key materials, the latest salvo in a diplomatic row between Seoul and Tokyo over wartime forced labor.

The chip business was still Samsung’s top earner but it reported a steep 71 percent fall in operating profit to 3.4 trillion won in the three months to June, from 11.6 trillion won in the same period a year ago.

The mobile business booked 1.6 trillion won in quarterly profit, down 42 percent from a year ago, weighed by slower sales of flagship models and increased marketing expenses.

While Samsung plans two high-end mobile product launches -- including its first foldable device -- in the second half to revive profit, weakness in the global smartphone market will limit any upside, Reuters noted.

Samsung's overall operating profit was 6.6 trillion won (US$5.6 billion) in the second quarter, in line with 6.5 trillion won the company had estimated earlier this month.

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