Samsung Electronics predicted its Q2 operating profit would plunge and sales decline again, due to weak memory chip and smartphone demand.
In earnings guidance issued today (5 July), the South Korean vendor estimated operating profit would be down 56 per cent year-on-year to KRW6.5 trillion ($5.5 billion) and sales 4.3 per cent lower at KRW56 trillion.
The estimates, submitted in a regulatory filing, include a one-time gain related to its display business.
Samsung doesn’t break out revenue or operating profit for each business division in the quarterly guidance. It is expected to release detailed earnings later this month.
An oversupply of DRAM and NAND flash chips, made worse by a sharp drop in purchases by major customer Huawei, is expected to continue for the rest of 2019. Memory chips account for about a third of Samsung’s total sales.
Research company TrendForce predicts DRAM prices will decline by 10 per cent to 15 per cent in Q3.
Last month, the outfit said global smartphone demand weakened even more than originally predicted due to escalating geo-political risks. It warned its 2019 shipments prediction of 1.4 billion units, which would already be down by between 5 per cent and 7 per cent, could prove conservative.
Samsung suffered a dismal Q1, with net income dropping 56 per cent year-on-year to KRW5.11 trillion and revenue down 13.5 per cent to KRW52.4 trillion.Subscribe to our daily newsletter Back