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Samsung Electronics logo at the company’s Seocho building in Seoul
AFP via Getty Images
Samsung
Electronics said Friday that it expects its second-quarter profit to be its lowest since early 2009. The world’s largest smartphone maker is contending with weak consumer demand for technology products, which has led to a glut of memory chips.
Samsung
’s
(ticker: 005930.South Korea) forecast suggests it continues to struggle with slow chip demand, which caused its semiconductor segment to book a hefty loss in the first quarter of the year. Prices for dynamic random-access memory and flash memory chips peaked as consumers stocked up on devices during the Covid-19 pandemic, but manufacturers including Samsung have subsequently been forced to cut output amid falling demand.
Samsung said it expects operating profit for the June quarter of 600 billion won, or around $458 million, versus 14.1 trillion won in the same period a year earlier. Revenue for the April-June period is expected to slide by 22% to 60 trillion won.
The Korean company didn’t break down the projections by its individual businesses but it is likely to also be facing challenges in its smartphone business, which competes with
Apple
(AAPL). While Samsung overtook
Apple
as the largest global smartphone maker by market share in the first quarter of this year, according to Counterpoint Research, the overall smartphone market fell by 14% from the same period the previous year and weakness is expected to have carried over into the second quarter.
“Given the weakness in consumer goods and electronics end markets, I expect that there has been some weakness there as well, but the main event [for Samsung] almost certainly has been semiconductors,” wrote Richard Windsor of research company Radio Free Mobile, in a research note.
However, there could be better news coming for Samsung, which has previously suggested chip demand will recover in the second half of this year. Executives at U.S. rival
Micron Technology
(MU) said last month they believed the memory-chip industry had passed its trough and was set for recovery.
“A lot will depend on what Samsung says when it reports its full Q2 2023 results later this month, but every indication is that it will echo Micron’s comments and state that while things are not getting better, they have stopped getting worse,” Windsor wrote.
Samsung stock fell 2.4% on Friday.
Write to Adam Clark at [email protected]
Source: https://www.barrons.com/articles/apple-samsung-chips-smartphone-stocks-micron-c73beaca?siteid=yhoof2&yptr=yahoo