Samsung Electronics has published an earnings guidance to inform its investors that it may see a bad quarter for the first time, thanks to slow iPhone sales. The announcement, shared by Reuters, shared that the slow global economic growth and in turn lower demand for memory chips will affect earnings.
“The company expects the scope of price declines in main memory chip products to be larger than expected,” Samsung quoted in the filing.
Financial analyst firm Refinitiv SmartEstimate said that Samsung’s operating profit for January to March 2019 was at 7.2 trillion won (~RM26.5 billion). When compared to the same time period in 2018, Samsung Electronics recorded 15.6 trillion won (~RM56 billion) in operating profit. The decline of the profit can be attributed to the lower DRAM prices, which according to DRAMeXchange, went down over 20% in the first quarter of 2019.
Ironically, the sluggish sale of iPhones is also a contributing factor to its lower operating profit. This is because Samsung is still a major supplier for OLED panels that are used with Apple’s newer iPhones. And while it isn’t a major supplier of memory chips to Apple, the Korean giant does supply Apple with the DRAM required for its products, so the pinch is also felt there.
There is a light at the end of the tunnel; the company expects the second half of 2019 to be better for the memory market, with sales to improve within the third quarter. OLED demand is also expected to increase by the second half, signalling better times for the Korean company.
(Source: Reuters)
