(Reuters) — South Korea’s Samsung Electronics flagged improved second-half outcomes on expectations of a choose up in reminiscence chip and smartphone gross sales, after posting its weakest revenue in additional than two years within the first quarter.
The world’s high maker of semiconductors, nevertheless, warned of extra short-term ache within the second quarter, with reminiscence chip costs more likely to decline additional earlier than a rebound in demand as information facilities re-stock later within the 12 months.
“For the second half of 2019, the corporate expects reminiscence chip demand for high-density merchandise to extend, however uncertainties within the exterior atmosphere will persist,” the tech large stated in an announcement.
Hit by falls in chip costs and slowing demand for show panels, Samsung posted working revenue of 6.2 trillion received ($5.Four billion) within the quarter ended March, smallest since late 2016 however in keeping with the corporate’s steerage.
Income fell 13.5 p.c to 52.Four trillion received, additionally in keeping with its earlier estimates.
Samsung’s core semiconductor enterprise booked a 64 p.c fall in working revenue to 4.1 trillion received, whereas the show enterprise logged 560 billion received in losses.
Reminiscence chip makers have been hit by a downturn within the world smartphone market and a fall in demand from information facilities behind cloud computing providers amid a broader financial slowdown.
Samsung’s smaller rival, SK Hynix, final week posted the slimmest quarterly working revenue in over two years. Nevertheless it was assured chip demand would recuperate later this 12 months, a sentiment echoed by Samsung on Tuesday.
Samsung stated its server DRAM chip clients would begin rebuilding inventories from the tip of the second quarter, whereas new smartphone fashions would assist gross sales of cell DRAM.
For NAND flash reminiscence chips that suffered large worth falls since final 12 months, Samsung stated market situations would stabilize within the second half as high-density chip adoption for cell gadgets drives up demand.
An easing in China-U.S. commerce tensions may additionally unlock some demand for client electronics and encourage Chinese language cloud service suppliers, which had stockpiled chips in anticipation of a protracted commerce conflict, to decrease their inventories to extra regular ranges, analysts stated.
“On the macroeconomic aspect, China might strengthen its IT trade to assist the financial system and if there’s a commerce settlement signed between China and United States, these will drive up demand for Samsung’s merchandise, like chips,” senior analyst Music Myung-sup at HI Funding and Securities stated.
The world’s high smartphone maker stated its cell enterprise posted a 40 p.c drop in working revenue to 2.three trillion received within the first quarter.
The Apple Inc rival and provider is hoping to revive flagging progress in its cell enterprise with its newest handset, that includes an enormous, bending display.
However in a blow to its renewed concentrate on innovation, Samsung delayed world gross sales of the foldable cellphone after reviewers found issues with the show.
Samsung, which provides screens for its personal folding telephones, forecast weak second-quarter earnings within the show enterprise as demand for versatile screens was anticipated to stay weak.
Nevertheless it stated demand for versatile show panels would doubtless choose up and gross sales for its smartphones had been additionally anticipated to rise within the second half, led by new fashions in all segments together with the low-end Galaxy A sequence.
There may be “no change” within the firm’s push towards foldable telephones, stated Lee Jong-min, vp of the corporate’s cell enterprise.
“Samsung Electronics have been making ready Galaxy Fold for an extended interval and there’s no change to our path to offer premium experiences for purchasers needing innovation,” Lee stated, reiterating Samsung will discover the rationale behind the issues with the show.
(Reporting by Ju-min Park and Heekyong Yang; Enhancing by Stephen Coates and Himani Sarkar)